Office Hours: I'm the CEO of Grasshopper Bank and former COO of PEX, EVP at Square 1 Bank, and SVP at Imperial Bank.Featured

Hi everyone! I’m Judith Erwin, CEO of Grasshopper Bank, a digital-first business and venture bank serving the full innovation economy ecosystem including founders, their companies, and investors. I co-founded Grasshopper based on a vision of a new kind of bank, one that emphasizes relationships, forward momentum and support for the next generation of business. Prior to Grasshopper Bank, I was the COO of PEX, EVP and founder of strategic business initiatives at Square 1 Bank, SVP and managing director at Imperial Bank, and VP of business development at Comerica Bank. Ask me anything about building a company, leadership, fintech, scaling, and more!
Thanks so much for joining us @JudithErwin!Elphas – please ask @JudithErwin your questions before Friday, November 20th. @JudithErwin may not have time to answer every questions, so emoji upvote your favorites πŸ”₯πŸ‘πŸΎβž•
@JudithErwin, great to learn about your business recently. Congratulations on being the first female-led Bank in the US and many more milestones to come! As a fintech /impact investing marketplace seeking to win gains for both investors and social innovators in emerging markets, I find the compliance piece of lending/banking mind-boggling. How did you handle compliance in the early days and cumulate the resources (money, staff, counsel) to achieve what you needed? What suggestions do you have for Founders in this regard including leveraging Banking as Service applications? What did you learn about culture/ early hires that you think really helped your team achieve your vision? Thank you for leveraging your experience to support new Founders. Also thanks to @farah, fellow Elpha member for highlighting your work to me!
I was very fortunate to find a very seasoned risk officer in my early days. There are also a lot of free resources (and paid) for compliance assistance. We also raised a lot of money (required by the OCC) which helped us develop the resources internally to make this part work. Banking as a service is a very complex offering though there are a lot of turnkey providers out there. We haven't developed this platform ourselves because it is not in our sweet spot. The difficulty is a very narrow set of revenue drivers. Though becoming a bank is very cumbersome and time-consuming, it does give us several revenue levers: deposits, loans, foreign exchange, credit cards, letters of credit. Many of the BAAS companies are limited to just interchange revenue which is a bit tenuous. At $10B, there is a cap on how much interchange revenue you can earn and it has been largely abolished in Europe. Early hires are critical to establishing the values of the sustained company. I spent a lot of time widening my network before I got started to insure that I had a much broader set of potential recruits. I went to my own network (on Linked IN) and asked to be introduced to their network and then asked that circle to introduce me... I do stalk Linked In to meet new people, especially outside my area of expertise. I hope that helps. Good luck!
How did you define your customer base at the outset, and has that evolved over time? Thank you for sharing your perspectives with us!
I've been fortunate to be a part of this small ecosystem since the early 90s and have developed a very strong understanding of what an entrepreneur and their investors need, issues they face, etc. As a founder myself twice over, this also gives me the insight of how very hard it is to start and run a company. This helps us identify points of pain and fix them proactively as best we can. Hope that helps!!
Thank you! I apologize for the double post of my question. My phone didn't show the original had loaded. Elpha is richer for your work and openess to share your knowledge. I imagine your personal experience as founder is a huge asset to those Grasshopper serves. Thanks again for your post!
Hi @JudithErwin thanks so much for hanging out here with the Elphas. We were with Square 1 Bank for 4 years! We recently moved to Mercury Bank (I didn't know or hear of Grasshopper until this Q&A). We are super happy with Mercury though always open to learning about new and women owned services. I'm wondering how does Grasshopper differentiate?
Yay Sq 1!!! First I would say, if you are happy, that is a good thing. The primary difference is that we are a full fledged bank which means we control our destiny. Mercury works through another bank which then drives their capabilities and compliance requirements. They have limited control. We also make sure that you have access to skilled Grasshoppers when you need them vs. being completely digital. We are digital but with a human in the middle. I think other points of difference might be the ability to do wire transfers? Happy to talk further at any time. [email protected]. Best of luck!
Hi @JudithErwin got it. Thank you for the clarification. I learned something new! Yes, Mercury uses Evolve Bank. It looks like Mercury built a really good front-end experience on top of Evolve's banking infrastructure. I'll reach out to you via email. would love to learn more about Grasshopper.Yes, the team at Sq 1 is awesome and helpful. I did question why many of the functions/services we can manage on Mercury was not as straightforward on Sq.
How did you decide to define Grasshopper's market/customer base? What considerations heavily influenced how that looks? Thank you so much for taking the time to share your perspectives with us!
As in my prior reply, I'm just an old timer in this space and have learned (sometimes the hard way) what matters...what truly makes a difference for our clients.
Hi Judith, I am a newly graduated student in BBA, and i specialized in finance. As i finished my bachelor, i am now searching for an internship or a job or training related to finance. I would just love to have some more guidance on how to choose a field in finance and how it is in a job environment. I would love to excel in it and get an opportunity to be mentored.Also, i would love to build an easier way to make transactions from my country(Madagascar) to another, a lot of people do need it. But because i lack the experience i am struggling in asking people they usually dont take me seriously.Thanks already for your help.
Hello @JudithErwin, Congrats on Grasshopper!I am a founder of a fintech startup and am looking for the best way to show product market fit on a very tight budget. Any suggestions on places for customer surveys or options for market research for fintech founders?
Great question. CB Insights offers free white papers on this topic. I would also scan Linked In and Meet Ups for podcasts or free forums for discussions. Some fintech investors also put white papers on their websites about their investment theses that can provide background as well. Part of the answer depends on your target client. If it's banks, there are many banking associations that have free forums on innovation. Depending on your state, there will be a state banking organization (In NY, it's the NYBA) that also has resources you can access. FDIC and OCC have similar resources. Best of luck on your journey!
@JudithErwin Thank you so much! Super helpful!
@JudithErwin really admire what your team is building at Grasshopper Bank! Lauren McCollom shared some amazing insight on your business and I am excited to see your team continue to grow and make highly meaningful upgrades to the banking space.
Thanks so much for you kind note. It has been quite a journey. Miles to go...
Hi @JudithErwin Thanks so much for offering your time and advice! What's your take on setting up a neobank type debit/checking account? Would you mind sharing any lessons learned/ word of wisdom?
Probably the most important thing is to make sure you match what products and services you need to the provider. Some new banks are very specialized in a few things and they do them well. Check on some basics like FDIC insurance, the ability to send wire transfers, the ability to talk to someone if you have a question. Many use other banks' processing so you will want to know which bank and how well capitalized that bank is and their general record of client service. Grasshopper chose to be a full fledged commercial bank vs. the banking as a service strategy. It ultimately should be based on your expectations and needs for their services. Hope that helps.
Thanks Judith!
Hey Judith, Really love Grasshopper and FinTech generally. Was curious to know your thoughts on building an Open Banking ecosystem with traditional FI's as well as challenger banks. What do you think some of the roadblocks will be and what will some of the easy wins be? In Canada right now (i'm based in Toronto) we're consulting on the second phase of open banking and looking into three different frameworks (open data, open process & open products). It appears as though the FI's really aren't prepared for what this could mean for them while the challengers and startups are making strides into this field. Curious to know how this could change the whole ecosystem and what will happen to both parties if we move forward.Sorry if. this is a complex question, have been in FinTech for 10+ years and rarely get to chat with people outside of my peers about it. I'm just a big ol' FinTech nerd over here!
Hi Kate. The biggest hurdle initially is regulatory. There are very strict requirements in the FFIEC guidelines from the OCC in our case that mandate how technology can be used. We do do some open source and it is definitely the final destination I believe. Implementation of cloud usage will ultimately make this more feasible as well but very few US banks have taken this step. You are always welcome to ping me at [email protected] if you want to geek out a bit.