Grasshopper, the digital business bank founded in 2016 by Judith Erwin, has announced a “relaunch” with a new CEO and a new core tech platform.
The new management team is led by former Radius Bank CEO, Mike Butler. Radius Bank, an all-digital branchless bank with a focus on small businesses, was acquired by LendingClub, an early case of a fintech buying a bank, but not the first as Ron Shevlin noted in these pages — that was Green Dot which acquired Bonneville Bank back in 2011.
At Grasshopper, Butler has installed some of the same software that he used during his 13 years at Radius Bank. He has replaced Grasshopper’s Temenos core banking system with FIS IBS.
“FIS has proven to be very adept at API banking and allows us to use fintech partners to API into the core, Butler said.
Butler defines his target as the business and innovation economy, similar to what he was doing at Radius Bank, and he is using a similar software stack, including Narmi for digital account opening and supporting mobile, AutoBooks to let businesses invoice customers and have the funds deposited directly to their accounts and Treasury Prime to help fintechs build a Banking as a Service (BaaS) layer with Grasshopper. The bank also uses Hummingbird for compliance and Alloy for identification authentication.
Moving to FIS went rather quickly. Taira Hall, senior vice president of B2B & strategic innovation executive at FIS, said the company has extensive experience converting customers from their existing systems to its platform.
“We do this consistently for financial institutions of all sizes and scale. A partnership like the one with Grasshopper is a great example because they rely on our experience in understanding their needs and guiding that conversion to meet the needs of their customers.”
Grasshopper’s executive team has been working with FIS since they were part of Radius Bank “and we have continued to innovate with them,” she added. Hall said FIS has a long history of enabling powerful API use cases through its bank channel.
Grasshopper is using those APIs to offer specialized services that may exceed what FIS has.
“We use the FIS core banking, and I think they understand the need for them to open up their core to other products,” said Chris Tremond, chief digital officer who moved to Grasshopper with Butler from Radius Bank.
“We are using Treasury Prime to enhance the core in a way that we want, versus the way they say we should do it.”
“We call them our plumber,” said Butler. “They’re the one who allow our other fintech partners to create a platform for us that we think is the Amazon-like platform for our discerning digital customers.”
The bank is apparently looking for growth among its clients — it has hired a head of yacht leasing and has also expanded into commercial real estate financing.
“The new direction is buoyed by substantial growth over the past year with total loans increasing by 19 percent, total deposits increasing by 75 percent and total assets increasing by 32 percent,” the company said in its announcement.”
Butler said Grasshopper has seen a huge demand driven in part by the federal PPP program.
“We do get excited about the technology and are excited by our partnership model and embracing fintechs in a bunch of ways. But we also expanded in to two or three other lines of business — SBA business. We are big, big fans of having an SBA product for our clients, the SBA product is very valuable and helpful, and we feel we are experts.”
The bank has also introduced Innovator Business Checking – a new digital checking account with a Visa debit card designed for startups and small businesses. A client can open the account online in just minutes.
“We are going to offer paper checks, but I think the digital technologies will be better adopted.”
The bank works VC firms nationwide, with a bias toward those that work with fintechs, and with their portfolio companies, Butler said.
Grasshopper will offer depository and treasury management services to fintechs, said Tremond.
“Some of them are coming to us, looking to offer white label banking products to their end clients, whether B2C or B2B. We also offer deposits through an API. Or they might want our APIs for their own corp banking needs. We work with a broad range of clients, typically venture backed pre-seed, to B or C round, fintechs that want to offer a financial services product to white label or embedded finance.”