Future of Banking: Grasshopper Bank

We are launching a series showcasing banks that are innovating in the embedded finance industry and entering into bank-fintech partnerships to create new revenue streams and financial products. 

This month we profile Grasshopper Bank, a digital-first bank serving the business and innovation economy. Grasshopper was the first financial institution to leverage the embedded finance partnership between core provider FIS and Treasury Prime, serving as the pilot bank in building out FIS’ Banking-as-a-Service (“BaaS”) and corporate application program interface platform. In March 2023, Grasshopper reported a 239% increase in their total revenue, a 262% uptick in loans, and a 124% increase in deposits in 2022 when compared to the year before. 

Onboarding new clients in record time amid the banking crisis 

All hands have been on deck at Grasshopper Bank and Treasury Prime since March following the collapse of three banks, with businesses looking to move funds to Grasshopper through Treasury Prime’s embedded banking software platform. Team members from both companies acted quickly to help customers. Many worked weekends to stand up new embedded finance clients. One of those companies was able to set up payment rails within 72 hours following Treasury Prime’s detailed banking API docs. 

“Everything is operating on all cylinders,” says Lauren McCollom, Director, Banking-as-a-Service at Grasshopper Bank. “We are ready to handle all of it. Being a digital-first bank really set the stage for success. If you can talk to a live person and get an account opened in 20 minutes from your computer without having to go to a bank, it helps a lot.”

BaaS growth engine

This digital-first approach represents a dramatic turnaround for Grasshopper since the arrival of CEO Mike Butler, Chief Digital Officer Chris Tremont, and others in executive and management roles, in 2021. 

Tremont and Butler joined from Radius Bank, which they had sold to LendingClub. The team came to Grasshopper to modernize the bank’s tech stack and launched a plan to expand the bank into digital business banking and banking as a service (BaaS). 

To that end, they kicked off a partnership and bank integration with Treasury Prime to offer embedded banking products for small business clients. This investment in fintech partnerships has paid off. By the end of March 2023, Grasshopper generated over $7 billion in total transaction volume just for BaaS/API banking alone. 

“BaaS is a significant growth engine for the bank,” McCollom says. “Supporting different types of fintech partners has allowed us to grow deposits and revenue opportunities.” 

Implementing embedded banking

As the embedded banking software provider, Treasury Prime provides the connective tissue — the API — between the enterprise and the bank. A dedicated implementation manager and engineering team work hand in hand with both parties to integrate the two systems and ensure financial transactions are running smoothly on the platform. 

Many fintech startups look for banks that include banking-as-a-service (BaaS) as part of their services, according to Insider Intelligence. Rather than building out separate integrations with each company, which is complex, expensive, labor-intensive, and time-consuming, a bank that is integrated with Treasury Prime’s banking APIs can expedite multiple enterprise connections with remarkable speed. 

“Treasury Prime has a great sales culture and brings in quality deals with a customer-first mindset. The communication is excellent and the technology is adaptable, which makes it more usable and feature-complete for our clients,” McCollom says. 

Products and services that Grasshopper is providing to fintechs through the Treasury Prime platform include:

• Commercial Checking and Savings accounts 

• Retail Checking Accounts 

• Debit Card Issuing

• ACH (Same Day)

• ACH (Standard) 

• Wire Transfers (Domestic and International) 

• Know Your Customer / Business (KYC & KYB)

• Bill Pay (commercial)
  

Banks like Grasshopper working with Treasury Prime, collaborating on products such as OneKey Banking and Enhanced FDIC Insurance can access other competitive products to boost their offering in the market. 

Future of bank fintech partnerships

Grasshopper values quality and is careful to select well-curated partners. Currently, they are vetting a number of promising fintech partnerships in the pipeline, according to McCollom. 

Aligning the use cases during the prospect stage and being transparent up front on the scope of the project for both sides beforehand helps to set expectations. And with experience, the implementation process becomes more streamlined. 

“This allows us to tailor the implementation to fintechs really elegantly to ensure that we’re meeting timelines, deliverables, and requirements of all parties involved,” she says.

Wondering how embedded banking could help your business? Contact Treasury Prime — we have a true multi-bank network, the deepest bank core integrations, and extensive compliance experience. Read more about our $40 million Series C Funding and why Tearsheet named us the Best Banking as a Service company for the second year in a row. Talk to the best embedded finance team in the industry.

Related banks integration stories:

How Community Banks Can Stay Competitive

How to Make Bank Fintech Partnerships Profitable

Banks Are Missing Out on Revenue Opportunities Through BaaS Partnerships