Grasshopper Bank entered into the first BaaS agreement with fintech for cash management

Dive card:

• New York City-based Grasshopper Bank signed an agreement to provide banking-as-a-service (BaaS) to fintech Treasure Financial for cash management, the two companies announced on Tuesday.
• Through the partnership, Treasure aims to strengthen its treasury management solution by offering its customers access to FDIC-insured deposit products and payment options, the companies said.
• The bond is that first BaaS agreement for Grasshopper Bank, which under the leadership of CEO Mike Butler, has expanded its initial focus on the tech startup market to include the small business sector and BaaS offerings.

Diving Insights:

“Many banks claim to offer BaaS without fully offering a solution,” said Sam Strasser, CEO and co-founder of San Francisco-based Treasure, which helps businesses track cash flow and monetize idle cash. “We were able to effectively integrate with Grasshopper Bank and their platform to fully automate our offering and manage customer bank accounts.”

The two companies have strong alignment in terms of the markets they serve, Butler said, adding that the two firms are exploring ways to potentially offer Treasure’s solution to Grasshopper’s customers.

“Customers are increasingly accustomed to digital-first experiences that include flexibility and built-in finance options,” Butler said. “We look forward to exploring our ability to provide this type of platform to our customers in the future.”

Butler said the most important aspects of a successful BaaS partnership from Grasshopper’s perspective are cultural fit, respect for the regulatory environment and a mutually beneficial agreement that is a win-win for both sides.

“Treasure is a great example of what we look for in terms of a cultural fit and offering a unique product that adds value to the market,” he said.

The $300 million Grasshopper Bank was launched in 2019 to provide banking services to early-stage startups.

Since joining the digital bank in 2021, Butler, the former Radius Bank CEO, has revamped Grasshopper’s technology stack to enable it to offer BaaS, and has expanded the bank’s focus to serve small business customers.

“Banking as a service is a difficult business,” Butler told Financial Brand in March. “You have to provide the BaaS client with unparalleled responsiveness, and you also have to face major hurdles on the regulatory side. You have to run a safe shop.”

Amidst the bank’s relaunch, Grasshopper’s central focus remains providing tailored services to meet customers’ needs, Butler said.

“As SMEs introduce the next lifecycle of innovation, regardless of business model or industry, venture-backed or not, Grasshopper believes the future of banking is inclusive and strongly focused on customer needs,” said Butler, who helped orchestrate Radius Bank’s sale to LendingClub in 2020. “During economic uncertainty, small businesses need a financial partner who is empathetic and understands their specific needs, such as innovative digital tools and services to help them meet the demands of their business.”