Tag: Digital banking

Whitney McDonald 0:06
Hello and welcome to The Buzz a bank automation news podcast. My name is Whitney McDonald and I’m the editor of bank automation News. Today is October 3 2023. Joining me to discuss grasshoppers latest innovation to launch accelerator checking is Chief Digital Officer at the bank, Chris Tremont. Throughout his career, he spent time at radius bank and Key Bank before joining grasshopper in 2021. He’s also been a speaker at past bank automation summits about his efforts at grasshopper. Chris, thanks for being here.Chris Tremont 0:38
Hi, I’m Chris Tremont, Chief Digital Officer for grasshopper bank. I joined the company about two years ago. Prior to that I served in a similar capacity for 12 or 13 years at radius bank based out in Boston, a little bit about grasshopper bank. We’re a digital only bank headquartered in New York that’s focused on serving the business and innovation economy. And we do that 100% digitally across the United States. And we do it through a combination of really solid product, digital resources and really passionate people toWhitney McDonald 1:17
Great, well, thanks so much for joining us for the buzz. I’d like to get right into your latest innovation that you’ve been working on at grasshopper called the accelerator checking, can you talk me through what you guys are solving for and what you’re announcing?

Chris Tremont 1:32
Sure, we’re really excited about this. And I think as as maybe a segue talk a little bit about where we’ve come over the last couple of years. So grasshopper itself was founded in 2019. So still young, by Banking Terms, only about four years old. A number of new folks joined the company about two years ago. And we kept the mission intact. And the mission of the company is to serve the was the business and innovation economy. And the way that started with me was really working with venture capital firms, private equity firms and the companies that they invest in. And so we’ve kept that mission intact. But we’ve kind of broaden the vision of who we’re serving. So we’re still working with that line of business with within the venture fund world. But we’ve layered in a couple of other areas that includes some new lending products like working in the SBA and commercial real estate space, as well as on the deposit gathering side working with fintechs through banking as a service, and a little bit more directly with small and medium sized businesses. So SMBs. And so we’ve spent really like the last 18 months or so layering in those new components. And as you can imagine, part of that was building out a new team, as well as new technology, infrastructure. And so where we started on the deposit gathering side was really working with within the small business community, and launching a digital checking account product for them. We’ve seen a lot of good success over the last 14 or 15 months since that’s been launched. And now today, we’re really excited for sort of the next iteration or the next segment that we’re going deeper into serving, leveraging our digital technology. And that’s working more with venture backed startups. And so the product itself, we’re calling the accelerator checking, but from a macro view, it’s much broader than that than just an operating account. But starting there, it’s really focused on the small business or the venture startups needs of a really useful product for managing their day to day cash flow, money in money out. So it starts with the product on the deposit side and making it really useful for the startup to manage their day to day business. I think taking another step back, what we did was we said, We got to make it really easy to get the account open. So you can apply for the account digitally from any device and get an account approved and funded and under 10 minutes. So we think that’s a really nice feature of the product. The product itself, like I mentioned, has a lot of useful features and integrations from a money movement standpoint, as you would imagine, wires and ACH things like that source and table stakes products. But then we also have integrations with companies like auto books for digital payables and receivables, which we think is a really powerful tool. We work with a company called MX to allow for some better budgeting and cash flow management tools. So just to give a flavor of Like what’s inside that digital banking product, coupled with this kind of what we call a marketplace or an ecosystem. So what we believe is grasshopper is really great at providing a solid digital banking experience and a really good operating and payment accounts. But there’s more to startups financial needs than just that. And so we’ve layered in some best of breed called financial technology players to help surround our offering and make it stronger. And so some of the things that we’ll roll out over time starting this week, include access to things like venture debt, corporate credit cards, we have a partnership with ramp doing that startup insurance is important. So that’s going to be in there. And then just through our work with with our various teams in the venture in the FinTech space, we have a lot of connections into the VC community that are always looking to meet new startups from an investment standpoint. So we’re going to start to kind of cultivate our network and make referrals on either end right with the startup that might be looking for funding. We’re going to make those intros to some friends of ours on on the VC side,

Whitney McDonald 6:22
setting up getting into that network and gaining those deposits. Can you maybe talk through the gap that you’re able to fill here? Of course, we know that everything happened in the spring, and startups are looking to kind of change where they’re where they’re banking?

Chris Tremont 6:40
Yeah, it certainly has been an interesting, six or seven months, I suppose in in the banking industry, for sure. And so for us, the timing is is unique in that it’s twofold. One is, yes, we’ve seen some of the financial services providers that have worked with the startup community for many years, some of them are now gone, right, or they’ve been absorbed into larger organizations. And we’ll see where, where that strategy goes for those companies down the road. So there is a bit of a gap. Certainly that’s opened up for, for the startup community. At the same time, I would say as to a previous comment, grasshopper was was founded this way to be working in the venture community and to be working with startups. So it’s not a brand new segment for us. I would say, though, that maybe the narrative has changed over the last six months since the banking crisis happened, where maybe the way we went at it, at the beginning was, it was more about leading with the loan, or the the lending or the debt solution. And venture debt can be hard. Like we’ve, we’ve learned that we knew it, but like we’ve seen seeing this play out over the last few months and, and so not every bank is able to do it. And there just aren’t that many places for a startup to go to find it. And so that’s kind of maybe where we started. And now the narrative has changed a little bit more around every startup needs a good depository solution and a place for managing their money and their their payment infrastructure and things like that. And so I think like the macro level, you know, the industry changes have caused a gap. And at the same time internally for us, we’ve kind of repositioned our offering to be leading with the Depository relationship versus the loan, and have taken the time over the last 12 plus months to rebuild our technology infrastructure to better support this client base. And so that’s why we’re coming out now. To say we’re sort of, you know, with a new product, and serving this market, though, it’s not brand new to us, but there’s certainly a need for it and an opportunity, and something that we’ve been working on for many months, kind of behind the scenes anyways. And so it’s coming together, we believe at a nice time to be serving this market.

Whitney McDonald 9:13
Now, as you’ve kind of shifted that approach to gaining deposits and worked through this project, is this something that you something you guys have built in house or partnered on building the technology itself? Or is this something that was all a grasshopper initiative?

Chris Tremont 9:30
Yeah, we’re inside the company. We’re huge believers. If you think about a lot of times companies look at the buy build or partnership models, and we are strong believers in the partnership model. And so helping to build out our technology infrastructure, we consider a lot of the financial technology firms that we work with as partners of ours. And so we have a really, a really smart Are and dedicated and innovative product and data and engineering team inside the company that are kind of leading the strategy and helping to execute the vision. And then we partnered with some best of breed partners or companies out there to make this happen. And so to elaborate on that a little bit, like I mentioned earlier, we can open a startup depository account in 10 Minutes or Less without any paper, fully digital, well to be able to do that it takes our team, but we also partner with a company called mantle for the account opening. Behind the scenes, we work with a company called alloy for the decisioning on the consumer and the business itself and some other players that funnel into the aloe ecosystem to help make that approval decision. Once the accounts opened, we use a company called Narumi. For the online and mobile banking, user interface, they helped power that. And so that’s just a few examples of sort of this partnership model that we’ve used to build the technology to provide a really great digital banking experience for startups.

Whitney McDonald 11:16
Great. Yeah, I mean, a lot of those names that you just mentioned are something that that we’ve definitely covered in the past, ramp and mantle standout for sure. As you kind of launched this accelerator checking, you talk through kind of taking this different approach and to gaining deposits, kind of from a broader, bigger picture point of view, maybe we could just talk through the importance of financial institutions, gaining new deposits, looking for those new avenues to gain deposits and gain strength, getting those sticky deposits, maybe we could just talk through the importance of that that our audience can take away?

Chris Tremont 11:55
Yeah, that’s a great question. And a great, maybe issue or topic that was highlighted back in March as as we went through some of those issues. I think one topic it highlights is the importance of diversification. And in sort of how you’re building out your balance sheet, whether it’s loans, we’re talking about deposits today, so we can focus on that. But being diverse in or not single threaded or monoline in terms of who you serve, I believe is important. You know, every bank has a different strategy. But having some diversification there is something we as a company have always believed strongly in. So I think serving a wider audience is, is important. The second is you think about how rates have changed over the last 12 to 18 months. And certainly we could talk about maybe where we think they’re going over the next 1218 months as well, but

Speaker 2 12:59
at a much more elevated level now in September of 23, than where we were in February of 22. And I said this to folks along the way is, you know, for a while it was like deposit gathering wasn’t always this easy, you know, we had this time period where rates were low and deposits were flowing into banks, and they were sticking around and and we knew it wasn’t going to be that way all the time. And so I think outside of the diversification of the client base, having a strategy that’s probably a little bit less reliant on rate, though rate is important and is a larger part of the conversation, but really driven by relationship. And I That’s easy to say. But what I mean by that is sort of the you know, when you get into serving different clients segments, and what they’re looking for, some are less, you know, rate dependent, or rate demanding, and will move less, you know, when when rates change, or they’re chasing, chasing rate. And so I do think having a strategy, that is where you step back and say I’m gonna skate to where the puck is going in terms of serving growing client bases. In our case, we’ve said how do they want to interact with us? And we’ve said, digitally is the place we want to be. So like, how are you acquiring these customers? The products that you’re putting out there where rate is a component, but more about the relationship and helping in our case, let’s say it’s a business owner or a startup founder, really managing their cash and thinking through how am I getting paid? How am I paying my vendors? Do I have a banker I can call if I need to? Only if I need to, let’s say you know the self service model here

Chris Tremont 14:59
and Some other connections to within the industry, whether it be those VC referrals or access to other products, I think the point would be is providing more value than just talking about an interest rate is really important.

Whitney McDonald 15:16
On that know, kind of some self service options, how it works and what it presents? Could you maybe walk me through how a client or a startup would actually leverage accelerator checking?

Speaker 2 15:30
Sure. I mean, I think it starts with if you’re thinking about making a move, the ease of getting started with us, is unparalleled in the industry to say that you could open an account and be funded in less than 10 minutes, you know, I think is is fairly industry leading, we’re not the only ones that can do it, but like to get up and running fast. And to not have to walk into a bank branch with a lot of paperwork and spend the afternoon trying to get your account open, whether it’s a day or weeks, I don’t know. So I think getting up and running is important. And then from there, some of the tools that we’ve set up, like I mentioned, the ability to

Chris Tremont 16:15
set up invoices to get send out invoices to get paid, or using our bill payment services, like wire transfers, ACH bill pay, to pay vendors to pay employees, if you’ve got payroll, I mean, you could be up and running doing that in the first day with us. We are layering in some other technology to think about the financing side of things and the debt side of things through some partners as well. So if you’re actively seeking venture debt, or maybe you’re a company, a startup in the E commerce space, we’ve got some partnerships in the works, that will help maybe with some financing of receivables to improve cash flow in the short term.

Speaker 2 17:03
So there’s a couple of the ways connections into like we mentioned ramp, if you’re looking for a corporate credit card, the connection can be made there quite seamlessly. And actually the ramp transactions up here in the grasshopper experience. So it’s kind of this holistic approach. So I think like, broadly speaking, is like you can be up and running quickly. And you can leverage tools that

Chris Tremont 17:29
help you operate your business out of the gate right away.

Whitney McDonald 17:34
Now I know that you kind of gave a little bit of insight into something that you guys are working on. Anything else grasshopper has in the pipeline right now, either related to accelerator checking, or is this tool going to be something that you monitor and update often just kind of wondering for a little look ahead as to what grasshopper is working on?

Chris Tremont 17:54
Yeah, that’s a great question. And so we’re really excited to be focused here on this segment of working with with startups. And we’re going to continue to go deeper with the accelerator checking product, and the marketplace offerings that we have. So we hope to expand that out into services that startups need. This could be, you know, tax prep and accounting, things like that. So we’re gonna continue to improve on that experience. But I’d say more broadly, is, we’re a company that serves the business and innovation economy. So startups are one segment of it. Small and medium sized businesses are another large segment that we love, and we’ve been serving for a while. And there might be a couple other niches that we layer in down the road. But thinking about those two, and probably a third would be financial technology, or FinTech companies are three of the areas that we’re working on closely and continue to develop for. So I would call out. One is we’re working on our lending solutions in the small and medium sized business space. So that can be on and off balance sheet opportunities. So some referral opportunities or small medium sized businesses looking for a lending solution for us. We’re working on digitizing that process, more to come there probably in the next couple of months. And then we continue to be a big proponent of the FinTech banking as a service, embedded finance space. And so we’ve been a player in that for the last 12 or 18 months. We continue to work with our partner, Treasury prime and San Francisco to bring on quality fintechs that are looking to use our API’s and some really creative and innovative ways in the depository and payment space. So we’re going deeper, they’re getting pushed probably more around on real time payments and fed now, functionality, as you would imagine, in the FinTech world, so I think like that’s going to be our focus in that for that group over the next six to 12 months as well.

Whitney McDonald 20:16
You’ve been listening to the buzz, a bank automation news podcast, please follow us on LinkedIn. And as a reminder, you can rate this podcast on your platform of choice. Thank you for your time and be sure to visit us at Bank automation news.com For more automation news,

Transcribed by https://otter.ai