The financial technology company GreenSky’s role is an intermediary between lenders and potential borrowers, typically consumers with strong credit wishing to make large home-improvement purchases. The company promotes its role in providing technology to banks and merchants enabling them to make loans to consumers for their remodeling, solar, and other projects. Recently, the platform has added elective medical procedures to its lending program. Federally-insured, federal and state-chartered financial institutions provide financing for the company’s credit programs. The company’s strong second quarter results are an indication of the importance and stability of its relationships with banks, home improvement enterprises, and health care providers.
Merging merchant base and technology equals growth
A September 2018 article in Forbes highlights a recent win for GreenSky as the company enters into a partnership with American Express. The credit card company’s established customers will boost its new partner’s reach significantly. American Express brings a more high-end merchant base, yet another growth dimension. The partnership benefits American Express as well because the company looks to attract more merchants, and now plans to market the technological offerings.
The number of merchants using the technology platform grew approximately 50 percent per year from 2015 through 2017. With American Express’ marketing efforts, this growth should continue.
EBITDA balancing act
Because of a slowing market for home projects, the financing platform has experienced a drop in transaction volume. During the years 2015 through 2017, transaction volume per merchant fell from approximately $409,000 to $346,000. Furthermore, analysts expect the volumes to continue to decline, reaching about $290,00 for 2020. Additionally, Forbes analysts project that the company will expand sales and marketing efforts, increasing costs. However, with the American Express partnership adding merchants to the platform, it is possible the drops in transactions will slow. Plus, American Express will provide efforts and opportunities for stabilization or growth with little effect on GreenSky’s operating costs.
Based in Atlanta, Georgia, and founded in 2006 GreenSky LLC is a financial technology company. The company offers a platform that allows consumers to finance big-ticket items such as furniture, replacement windows, and siding or elective medical procedures with a term, fixed-interest loan.