Dive Brief:

• New York City-based Grasshopper Bank signed a deal to offer banking-as-a-service (BaaS) to cash-management fintech Treasure Financial, the two companies announced Tuesday.
• Through the partnership, Treasure aims to bolster its treasury management solution by offering its customers access to FDIC-insured deposit products and payments capabilities, the companies said.
• The tie-up is the first BaaS deal for Grasshopper Bank, which under the leadership of CEO Mike Butler, has broadened its initial focus on the technology startup market to include the small-business sector and BaaS offerings. 

Dive Insight:

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

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

“Customers are growing increasingly accustomed to digital-first experiences that incorporate flexibility and embedded finance options,” Butler said. “We look forward to further exploring our ability to offer this type of platform to our clients in the future.”

Butler said the most important aspects of a successful BaaS partnership from Grasshopper's perspective are cultural alignment, respect for the regulatory environment and a mutually beneficial deal 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 are offering a unique product that brings added value to the marketplace,” he said. 

The $300 million-asset Grasshopper Bank 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 tech stack to enable it to offer BaaS, and has expanded the bank’s focus to serve small-business clients.

“Banking as a service is a hard business,” Butler told the Financial Brand in March. “You’ve got to give the BaaS client outstanding response and you also have to face large hurdles on the regulatory side. You have to run a safe and sound shop.”

Amid the bank’s relaunch, offering tailored services to meet clients’ needs remains Grasshopper’s central focus, Butler said.

“As SMBs introduce the next lifecycle of innovation, no matter the business model or industry, venture-backed or not, Grasshopper believes the future of banking is inclusive and heavily focused on the needs of the client,” 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.”