Since joining New York City-based Grasshopper Bank in 2021, CEO Mike Butler has overhauled the bank’s tech stack to offer banking as a service and serve small business clients.

In 2022, under the former Radius Bank CEO’s supervision, the more than $600 million-asset bank rebuilt its technology platform to focus on fintech partnerships. Since the revamp, the bank has secured deals with Treasury Prime, FIS, Narmi, Alloy, Visa, Autobooks, Hummingbird and Fiverity.

Grasshopper’s partnership with FIS and Treasury Prime helped it to become the first financial institution to tap into FIS’ embedded finance services and serve as the pilot bank in building out its BaaS and corporate application program interface platform, according to the firm.

In January, Grasshopper announced a partnership with Ramp, a leading corporate card and finance automation platform and with MANTL, an account origination solutions provider. The bank offers small and midsize business clients access to Ramp’s platform, including its virtual and physical corporate cards based on referrals. The collaboration will give small businesses a holistic view of their finances in one place, the bank said.

Grasshopper on Wednesday reported a 262% uptick in loans and a 124% increase in deposits, while total revenues exceeded $17 million — a 239% increase, year over year.

Grasshopper’s hiring saw a 31% boost since the start of 2022.

“Despite some economic headwinds, the market for our digital solutions continues to grow rapidly, and we will continue to work tirelessly to make sure that our clients have the exceptional digital banking experience they deserve and demand,” Butler said in a statement. “To do that, we will continue to partner with industry-leading fintech companies that help extend our capabilities and develop business lines that directly meet the needs of small and mid-sized businesses.”

This interview has been edited for clarity and brevity.

Banking Dive: What hurdles are you facing during this economic downturn?

MIKE BUTLER: I think the No. 1 hurdle always is motivating people. It is a very big

challenge, especially in a startup where there's a lot of hard work and the pay is down the road. 

[Second is] working with partners, and we're a partnership shop. So, we don't develop our own software. We've committed to embracing the fintech world as companies that we think create superior technology in a faster and more of an open architecture way. But working with partners to execute these strategies are also fairly big hurdles for us.

And I think the last one is .... the regulatory environment has gotten a bit strict. [T]hat has become a challenge and we spend more time with that, but you have to make sure that it doesn't become a distraction, and that you're operating within the safety and soundness guidelines of regulators. 

What is your approach to fintech partnerships?

BUTLER: We feel like it's one of our true strengths. We understand partnerships. And the one thing that I tell people is, once you try and refer to one of your fintech partners as a vendor, then you're in a bad place. We like to limit the number of partners that we have to engage with and pick the best that we possibly can that are aligned to us.

We do a great deal of due diligence upfront [with] our partners and understand their ability to work within our culture. Because that's important for us. You've got to be aligned to our culture.

How many partners do you prefer to work with at a given time?

BUTLER: There are two parts to this. We use fintech for our platform, which creates the customer experience that we think is critically important to serving the demands of the digital kind of client. And then we also have our banking-as-a-service business in which we provide white label solutions to companies that can benefit from a banking product. On the platform side, we'd say four to five partners is the [maximum] we've ever worked with. And in the banking-as-a-service side, we'd like to say 15 to 20 fintechs is all we really want to partner with.

How do you stand apart from the rest in the market?

BUTLER: Our fintech partners deliver what we expect them to deliver and that's a customer experience that delights our clients. And we think that is always a differentiator to client acquisition.