If you could build a bank from scratch, what would you do differently to established players? This question sparked the idea for Grasshopper Bank—the first 100 percent digital commercial bank in the U.S. Targeting the booming innovation ecosystem, Grasshopper Bank aims to offer anytime, anywhere banking services to born-online start-ups and technology companies.
Minerva Tantoco, Co-Founder and CTO of Grasshopper Bank, explains: “Retail banks have been delivering services online and on mobile for many years, but the commercial space has lagged behind. When my friend—and now fellow co-founder—asked me how I would create a bank from the ground-up, it was a topic I’d already been thinking about for some time. In the conversation that followed, we sketched out the architecture for a new commercial banking proposition: one that delivers the speed and convenience of the B2C experience for the B2B space.”
The first 100% digital commercial bank in the U.S.
Rethinking Commercial Banking
As a challenger bank, Grasshopper Bank was unencumbered by legacy infrastructure, which can account for as much as 80 percent of IT budgets at traditional commercial banks. From the outset, Grasshopper Bank aimed to avoid the cost and complexity of an on-premises core banking deployment. It looked for a solution that would enable it to deliver its services securely from the cloud.
“With a traditional core banking application, it doesn’t matter what shiny things you deploy on the front-end,” continues Minerva Tantoco. “If your core can’t support new technologies in a modular way, then you won’t be able to create truly innovative services.”
Grasshopper Bank plans to launch a mobile-first experience, offering tools for today’s entrepreneurs. It will include capabilities such as automated account-opening and a real-time cash burn calculator. To enable it to deliver, the bank defined three key requirements for its core banking system.
“We decided how we think the bank of the future will look,” says Minerva Tantoco. “In addition to multi-currency and multi-entity capabilities, we wanted a cloud-first platform, because we see that as the ultimate destination for all banks. Interoperability was also important, as we wanted to create a unique front-end that caters to our target market. Finally, we looked for a platform that supports open APIs—enabling us to take advantage of FinTech innovations as soon as they emerge.”
“Temenos was the only provider that was able to deliver on all three of our key requirements: cloud, interoperability and open APIs. With Temenos Transact, deployed in the Temenos Cloud, we are confident that we have a world-class core banking system that will scale with us as we grow.”Minerva Tantoco, Co-Founder and CTO
Selecting Future-Ready Technology
After evaluating more than 20 core banking platforms, Grasshopper Bank selected Temenos Transact as the foundation for its business.
Grasshopper Bank is embracing agile and DevOps methodologies in its engineering processes, adopting continuous development and testing. This approach is tightly aligned with the Temenos vision for the future of banking architectures, and the two companies are now working together closely to bring the Grasshopper Bank concept to market.
“In a few years from now, we know there will be something else we’ll want to connect to our core platform,” says Minerva Tantoco. “Because Temenos Transact gives us the ability to ‘plug and play’ new components as the demands of the market change, we won’t need to rewrite huge portions of our software to keep up with innovations in security, authentication technologies or payments platforms.”
Designing Cutting-Edge Services
As it moves ahead with its development program, Grasshopper Bank is already taking advantage of the interoperability of the Temenos platform. The organization is building its front-end experience on a combination of services from Temenos and FinTech providers—empowering the bank to select the optimal components for each user journey.
“One of our long-term goal for Temenos Transact is to create a banking-platform-as-a-service offering. In this model, customers would select whatever services they need – credit cards, loans, currencies – and we provision the necessary components front-to-back in a modular, agile way.”Minerva Tantoco, Co-Founder and CTO
Making an Impact
With API-driven web services, Grasshopper Bank will offer commercial clients access to a wider range of highly responsive services than ever before. Clients will be able to open new accounts entirely online, signing and uploading the required documents via their desktop or mobile. Checks mandated by regulations such as the Bank Secrecy Act (BSA) and Know Your Customer (KYC) will happen in real-time.
By automating these processes, Grasshopper Bank can free its employees to focus on value-added, client-facing services. Crucially, the bank will be positioned to deliver seamless digital banking experiences for entrepreneurs across the country—helping it gain a first-mover advantage in the U.S. market.
“One aspect of the Temenos offering that we’re most excited about is the Temenos Cloud, and we’re working with Temenos to develop the platform for the U.S. market,” says Minerva Tantoco. “As well as offering us far more cost-effective security and resilience than we could achieve with a traditional on-premises deployment, we’ll also have the ability to add and scale our services across cloud platforms from multiple different vendors.”
Minerva Tantoco concludes: “With any vendor, there are ups and downs, and what sustains you through those is the quality of the relationship. Temenos and Grasshopper Bank both invested in each other’s success—and that’s the very definition of a partnership.”
Temenos Transact was selected among more than 20 core banking platforms
Grasshopper Bank uses cloud-native, cloud-agnostic Temenos Transact to launch in record time.