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The rise of GreenSky as a lending partner

GreenSky Inc. is a leading fintech in the world. It provides financial solutions to the high number of customers that are in need of financial solutions. The business model offered by this company is one where merchants have an opportunity to give loans to their customers through the services of the fintech. The main customers of this model are in home improvement and health industries. Merchants offer low-interest rate loans to the customers, a factor that helps them to drive sales. A homeowner might be in need of home improvement services but cannot afford to pay the amount charged by the merchant in cash. The merchant can offer then a loan through GreenSky and allow them to get the services at no interest on the loan on the agreed repayment period.

GreenSky has been performing very well, attracting a high number of merchants thanks to the partnership between them and American Express. This fintech is simply the middleman in the business, they do not have any money to lend, but they connect the borrower to the lender. They make money through the fees they charge. They also take up the role of servicing the loan. Their charges are normally about seven percent of the amount transacted.

The partnership between GreenSky and American Express has boosted the number of merchants that operate through GreenSky. Merchants who have American Express membership can now serve their customers through the fintech’s services. This new model enables customers to purchase services or products they would not have managed in a paperless environment. There is no paperwork involved in the application of the loan.

The major obstacle to the growth of GreenSky has been the number of merchants operating through the platform. Early 2018, they only had 12,000 merchants, which is quite low for a business that would like to record better results. After the new partnership, this number has grown significantly. This fintech is attracting the attention of top investors in financial technology. They see it as the next big thing. In 2017, they moved over $3.8 billion in loan volume, which was a 30 percent increase from the previous year.

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