Grasshopper Bank announced Aug. 5 it completed a $46.6 million funding round that has sparked growth momentum and new goals. 

The funding round supports the digital bank’s April acquisition of Auto Club Trust FSB, the banking subsidiary of Auto Club Group — the second-largest AAA club in North America. The deal increased Grasshopper’s asset size by 53% to $1.4 billion. The funding round was led by Patriot Financial Partners with additional funding from Glendon Capital Management, according to an Aug. 5 release. 

Following the deal, Grasshopper is considering how to further scale the bank, Chief Executive Mike Butler told Bank Automation News. 

One idea the bank is looking at is taking its “BaaS business to the next level,” Butler said, noting that Grasshopper is able to offer its services and white-labeled products to other financial institutions. 

As the financial services industry becomes increasingly digital first, not all banks can keep up with the necessary technology shifts on their own, he said.  

For example, “if other banks are saying, ‘My branch network doesn’t work, my cost of funds is too high, my clients want a digital experience and I find it very hard to build,’ maybe a relationship with [Grasshopper] is the right way to do it.” 

This would entail a different use of Grasshopper’s platform, he said.  

For example, for now, Grasshopper offers the following digital services to fintechs, B2B marketplaces and manufacturers: 

• Embedded finance solutions; 

• API banking solutions; and 

• A BaaS platform. 

Growing the team

As Grasshopper scales, the bank has announced four appointments to its board of directors: 

• James Fitzgerald, former chief administrative and chief financial officer of $25.6 billion Eastern Bankshares and Eastern Bank; 

• Brian Graham, co-founder and partner at advisory and investment business Klaros Group; 

• Karen Solomon, bank regulatory lawyer at Covington and Burling; and 

• John Surgent, founder of GMS Surgent CPA taxation and financial reporting firm.