Grasshopper Bank with Michael Butler | E245

Providing banking solutions for the innovation economy.

On today's Fintech Impact episode, Jason Pereira will talk to Michael Butler, President & CEO Grasshopper Bank. The company began operations in 2019 and is a client-first digital bank serving small businesses, start-ups, and investors supporting them across the innovation economy.

Episode Highlights

  • 1.14: Grasshopper Bank was a digital bank that was formed about 12 months before the pandemic hit with its primary purpose was to deliver digital financial solutions into the business and innovation economy and that was its formation and the primary purpose 

  • 1.51: The company raised about $120 million, which was one of the largest capitals raises ever for Dinovo Bank and again it was formed by predominantly private equity money with the primary purpose to produce a digital solution for the business and innovation economy, says Michael.

  • 2.32: E-commerce has taken over the world over the last 10-15 years in a variety of different ways from you buying tires on Amazon to what now is buying your financial services through ecommerce solution.

  • 3.29: Fintech evolved as an alternative to your bank, which had what was perceived and is in a lot of cases a better solution than what can be found inside a bank. The problem is you can't get a bank and fintech together sometimes, so therein lies part of our strategy to deliver. This kind of industry-leading digital solution with Amazon like experience, says Michael.

  • 4.19: In March, Grasshopper Bank launched a totally digital treasury management solution for small businesses. That means that small businesses with up to four signers can sign an open up a depository account in less than 10 minutes on our platform and use an online and mobile platform that is specifically designed for them, says Michael.

  • 5.32: 7-8 years ago the ability to partner or distribution the way that the technology is based in, in tech space just wasn't there the same way it is today, says Jason.

  • 6.52: One of the biggest, hottest growing parts of ventures fintech and to the extent that we are, we consider ourselves more of a fintech with a bank charter, we think there is a real kind of alignment of mindset as it relates to working with these companies, we have a great deal of knowledge of how FinTech’s work because of using them on platforms or evaluating them for a variety of different purposes.

  • 7.27: Business becomes another leg of this stool in which if you are in the venture capital business and you are promoting a fintech, trying to get them aligned to a bank that they have a banking as a service relationship for them is an accelerator to the growth of the portfolio company, which then goes back to the success of the venture firm.

  • 11.26: SBA lending is a cornerstone of how small businesses operate. Forever, there has been a cry that small businesses can't get access to credit.

  • 14.20: We are a company that likes to be in niche and be places whereas a small bank we can be more powerful and bigger player than we otherwise wouldn't be, says Michael.

  • 16.12: Michael could never get enough of is entrepreneurial thinking and creativity. He thinks that the world becomes a better place when we can manage entrepreneurial thinking and creative thinking and better things come from it.

  • 16.49: Michael did a a deep dive evaluation of people and make sure people were enrolled, that they wanted to be in, that they were capable of being in, that they understood the strategy and were excited about executing against it. 

  • 18.00: Change excites Michael and the fact that he have new technologies that are playing a role in Fintech industry and that he is part of the industry that digital side that is going to be able to adapt it and move forward and deliver these kind of cool unique solutions into the business and innovation economy is what gets him up, gets him excited.

3 Key Points

  1. Michael explains how they differ and solve the problem of banking for the small Business Innovation economy. 

  2. Michael Butler has got the company website and they have basically resections, banking, lending and fintech in particular. He explains whether he is talking about services to startups and specifically services to venture capital and private equity firms? He also talks about what specific products or specific solutions he brings to bear for those markets?

  3. Michael says that they capture the deposits that are leaving the industry by creating relationships with fintech companies and then the other leg of the stool is we want to be involved in other lending activities that are associated with the business and innovation economy, not just venture but.

Tweetable Quotes

  • “Banks have a hard time due to its historical kind of tight regulatory environment and its ability to attract top talent on the technology side and to deliver industry-leading technology solutions.” - Michael Butler

  • “We have embraced the fintech movement and we use a partnership model to create our platforms and create the experiences that we think we need for our customers.” - Michael Butler 

  • “There is venture banking, which we know that has been growing rapidly over the last couple of years, predominantly being served by some larger organizations. And I think over the growth stages of this venture business, there has been smaller venture capital firms that have merged which they think that are more aligned to working with an organization like us.”  - Michael Butler

  • “So that's where the demand comes from this, this combination of industries shifting into more of technology-oriented products and services, small business and then the people who are running those businesses and their psychographics related to being technophiles versus not and demanding a digital solution.” - Michael Butler

  • “So niche businesses are attractive to us, the yacht business which serves apparently the private banking side of our portfolio would say it gives us diversification is a niche that we've gotten to know very well over the last 10 or 15 years, provides diversification in our balance sheet and a spot where we can be.” - Michael Butler

Resources Mentioned

Fintech ImpactJason PereiraFintech