Is starting a bank still lucrative? Not a fintech or other bank-like services, but a real bank. Judith Erwin does, but hers is a purely digital endeavor. The 35-year banking vet, who helped launch Square 1 Bank in 2005, and also held leadership roles at Imperial Bank, Comerica, and Plaza Bank of Commerce, now serves as CEO of New York’s Grasshopper Bank, and is poised to take it into the next generation.
Grasshopper, which received more than $130 million in capital from T. Rowe Price Associates and Patriot Financial, is the new kid on the banking block, but it already has some weight within the industry. The bank is the first to be chartered by the Office of the Comptroller of the Currency in the Northeast in more than 10 years and the ninth bank to receive a charter since 2008. Additionally, it’s also the first commercial bank that plans to fully utilize digital banking in the commercial banking space.
The bank doesn’t just serve those companies seeking global dominance. Instead, Grasshopper is focused on steadily growing, profitable companies that are more regional or local in scope. It will partner with entrepreneurial companies and deliver digitally-driven, streamlined services to give management teams more efficient command of day-to-day financial operations.
Something that has been lacking with traditional banking systems lack of innovation, according to Erwin, and very little customer service relationship with smaller, innovative companies. Oftentimes, these entrepreneurs cannot get a loan of $5 million or less.
Grasshopper will completely utilize digital banking in the commercial banking space. Opening an account won’t require multiple trips to the bank and paperwork. In fact, the entire process with Grasshopper can be completed within 10 minutes online.
“Grasshopper is poised to deliver banking services custom-designed for today's entrepreneurial companies and their venture capital backers," says Erwin. “Traditional banks, limited by antiquated and burdensome legacy systems, are less equipped to meet the needs of early stage companies. Their business models and infrastructure do not position them to provide products and services for today's digital entrepreneur at affordable prices, or to take advantage of new technologies around data, security, and user-friendly access.”