An overview of the GreenSky-American Express partnership
This multifaceted partnership is the first of its kind between a leading fintech platform and a major credit card company
We heard monday this new public fintech company, GreenSky, has partnered with American Express in a broad agreement. While we’ve seen some interesting fintech / banking partnerships over the past few years, this is one of the most important. It is also one of the first examples of a company that facilitates installment loans in partnership with a major credit card company.
I contacted GreenSky and American Express to find out more. But before we get to our conversations, let’s take a look at the three ways GreenSky partners with American Express.
- Some American Express merchants will be able to offer financing through GreenSky
American Express merchants will be able to offer GreenSky point-of-sale financing to consumers. This will happen in the two main verticals where GreenSky operates: home improvement and elective healthcare. Merchants can offer financing through the GreenSky Merchant app available for Android or iOS.
- American Express consumer card members can apply for an installment loan
This is a pilot project that will be available under the home improvement category in five US cities initially. Consumers will be able to apply for an installment loan using their American Express ID. The technology for this program will be provided by GreenSky and development is still ongoing before it becomes a production offering.
- Access to American Express vPayment
American Express vPayment is a virtual payment solution that provides a virtual account number for each transaction. In this system, a token can be provided to a customer for a single use. This obviously makes digital payment more secure and reduces the risk of fraud.
When I spoke with Gerry Benjamin, Vice President of GreenSky, he was very excited about this new multifaceted partnership with American Express. He said that at GreenSky they have long admired American Express as a company. He pointed out that there are 155,000 home improvement dealers in the United States who make over $ 1 million in annual revenue. GreenSky has only 4000 merchants who match this profile. Virtually all of the other 150,000 home improvement merchants that GreenSky aspires to work with accept American Express. So clearly this partnership offers a lot of leads for GreenSky.
the merchant program will be operational very quickly because everything is in place today. There will be an omnichannel approach to marketing this system, with American Express taking the lead in marketing to its own merchants. Depending on the merchant, sometimes GreenSky will be involved in the sales process, sometimes it will be driven primarily by American Express. As for the financing of these loans, the GreenSky banking consortium will provide all the capital.
The consumer credit component of this partnership will not be launched immediately. Technological developments need to be finalized to allow American Express cardholders to access a GreenSky installment loan through the American Express online portal. They will be able to search for local merchants who will accept the GreenSky solution, as well as find merchants outside of the GreenSky network and apply for a consumer loan online. As for the financing of these loans, American Express will provide all the capital.
I contacted Courtney Kelso, senior vice president of the Global Commercial Services division of American Express, and the contact person on this project. When I asked Courtney why they decided to partner with GreenSky, here’s what she said:
We are always striving to expand our relationships with merchants across the United States and help fuel their growth. Teaming up with GreenSky, which offers single point-of-sale loan technology, is another way to help home improvement and optional health care merchants drive more sales and meet evolving needs. of their customers.
One thing that interested me was the possibility of cannibalization of their credit card business, but Courtney made it clear that this was not a big concern. They want to be able to offer their customers a wide range of choices and have them select the solution that suits them best.
When I first heard this news on Monday morning, I was very impressed. I have long admired GreenSky because it is one of the most successful companies in online lending. They have become the dominant player in their niche and have built a highly profitable business in the process. Enabling them to secure this partnership while they are still relatively small is a success.
As for American Express, they must have been impressed with the GreenSky offer. With their resources, they obviously could have built a technology solution themselves, but they decided to partner with GreenSky instead. It will be very interesting to see the strength of this partnership, but it is clearly a big victory for GreenSky.