GreenSky CEO: Super regional banks are in the ‘driver’s seat’

At the same time, Zalik acknowledges that legacy tech infrastructure within many big banks could hinder progress

Super regional banks are in the “driver’s seat” when it comes to tech innovation in banking, fintech billionaire David Zalik said Thursday at the virtual LendIt Fintech USA 2020 conference.

“The super regional banks have an opportunity. I’d say that they’re in the driver’s seat,” said Zalik, chairman and CEO of Atlanta-based fintech player GreenSky. “The question is, are they gonna turn on the car and are they gonna hit the gas? Are they going to evolve?”

Zalik cited the brand equity, business relationships and long track records of super regional banks in making his assessment. However, Zalik added that branches are liabilities for some super regional banks but are assets for others, although he noted that Goldman Sachs’ Marcus online banking platform has succeeded without opening a single brick-and-mortar location.

Super regional banks control $50 billion to $500 billion in assets. Among them are GreenSky banking partners BMO Harris, Fifth Third and SunTrust, as well as BBVA, Capital One, KeyBank, PNC, Regions, State Street and Truist.

GreenSky’s technology enables merchants and banks to provide financing for customers. Much of its business comes from the home improvement sector.

Zalik said super regional banks have “a tremendous opportunity to leverage modern technology, to lead the way or be fast followers, and then I think you have the small banks that don’t want to evolve or can’t evolve.”

The legacy tech infrastructure within many big banks could hinder their ability to lead the way or follow, according to Zalik. He said super regional banks must figure out how to transform their legacy platforms into mobile-first platforms that still support brick-and-mortar branches.

“The companies that evolve and adapt are going to keep their customers and get more … business,” he said. “I think there’s a tremendous opportunity for super regional banks, but if I was a super regional bank, I would not create a different brand. Most of them have an unbelievable brand in their markets.”

Rather than focus on branding, Zalik suggested that super regional banks concentrate on advancing their tech capabilities and developing “best-in-class digital experiences.”

“I think you’ve got some amazing super regional banks that have ambitious management teams that are going to get in the car and turn it on and hit the gas,” he said, “and then you’ll have some smaller, less ambitious community banks that will keep doing local community banking and they will be marginalized.”

Zalik rebuffed the notion that super regional banks will buckle under competitive pressure from challenger banks and become extinct. In fact, he said, challenger banks like Chime and SoFi will need to either form tight partnerships with traditional banks or transform into full-fledged banks to be a “long-term winner.”

“The challenger banks are not going to rule the world,” Zalik said.

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