Grasshopper Bank advances inclusion, stamps out ‘pattern matching’

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New York City-based Grasshopper Bank is geared toward startups, with a focus on pain points for founders. Grasshopper opened in May 2019 after securing FDIC and OCC approval, a rare distinction for a digital-only bank.

Jeremy Shure, global head of Grasshopper Bank’s early-stage practice

Jeremy Shure, global head of Grasshopper’s early-stage practice, told Bank Innovation that the company serves founders where the banking industry has failed them. A simple, easy user experience is, similar to any digital bank, a core area of focus. But more importantly, Grasshopper seeks to reach a range of founders, regardless of their educational affiliations or networks.

“We don’t want to ‘pattern match,’” Shure said. “We don’t want to tell clients that they’re not a fit simply because they don’t have the right co-founders, investors, et cetera. We are aligned with funds, accelerators and constituents who care deeply about breaking the cycle.”

The bank last week launched “Grasshopper Grants,” a program that provides funding support for founders in their efforts to attend what it calls “critical events” throughout the year.

Grasshopper is currently working with a limited number of customers while in a beta phase, and declined to comment on specifics of customer numbers. The formal launch date for the bank is yet to be disclosed, but Grasshopper plans to offer microloans to early-stage companies, even those without institutional investors. The goal is to help these businesses access additional funding opportunities to spur further growth, Shure explained.

“If [startups] are asking for $100,000 or $200,000 in loans, where banks typically won’t play, we look at that as an opportunity to help founders hit that next inflection point. We have kind of flipped the model on its head. If we can support founders getting to the [funding] round and getting to their Series A through a smaller slug of debt, then that truly is a way to support the founder.”

See also: Why digital-only Grasshopper Bank chose Temenos’ cloud-native T24 core

In 2020, Shure said the bank’s priority is to continue to focus on client needs. He emphasized that Grasshopper has a banking license — unlike many other digital-only banking startups currently on the market — enabling it to tailor its offerings and product designs.

“Many assume that fintechs that provide banking-related services are truly a bank; that’s 100% false,” he said. “[Being a bank] allows us to do things that fintechs cannot do, such as lend money, and it also means that we are obligated and required to operate in a safe manner and maintain compliance with a number of consumer protection laws.”

Shure said the bank plans to design a user experience with founders in mind, particularly since their needs and expectations may differ from the average retail banking consumer. The advantage of working with founders, he explained, is that Grasshopper can consult them and use their feedback to evolve its product roadmap.

“What is exciting about Grasshopper, is the opportunity to build with two different constituents: the Grasshopper team and founders,” he said. “This is an opportunity to build something with founders and as we continue to expand, we’re going to continue to iterate.”

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https://bankinnovation.net/allposts/biz-lines/payments/grasshopper-bank-advances-inclusion-stamps-out-pattern-matching/