How Grasshopper Bank increased the number of accounts it could confidently approve

Meet Grasshopper

Grasshopper is a client-first, full service digital bank built for small businesses, startups, and investors in the innovation economy, offering business banking, lending, and API banking products entirely online. We spoke to Grasshopper’s SVP, Head of Product, Luther Liang about his team’s experience with GrailPay.

“Today, Grasshopper uses GrailPay to validate ACH fundings at account opening,” Liang said. “We have a fully online account opening process, and GrailPay validates the accounts that clients link to fund their account with us for the first time. That lets us approve those funds faster, more seamlessly, and without taking on additional risk."

Evaluating complex accounts required extra manual review

“When onboarding complex, newer businesses, validating funding information often required additional manual review," Liang said. Validating funding information was manual, and that process ran longest for newer businesses and startups without an established financial history. “It created real friction for our clients, and it cost us a lot of conversions as we tried to scale our business beyond those basic SMEs and more traditional Main Street businesses that aren't used to banking online.”

As a regulated bank, Grasshopper has to confirm a client is who they say they are, and that their money is real, using data alone since it never sees clients in person. Without enough information to make that call quickly, Grasshopper sometimes had no choice but to decline accounts it couldn't yet prove were safe to approve.

Grasshopper wanted a way to close that gap without loosening its standards. “We'd been looking for a partner to improve our ACH funding flow at onboarding for a long time,” Liang said. “But it didn't exist in the market the way we wanted it to." Until it did—the team found GrailPay, the risk and data network that turns fragmented bank data into a real-time risk score. “It was able to provide ACH history data that other solutions couldn’t and was willing to integrate into the systems we were already using.”

GrailPay showed Grasshopper it could approve more of the accounts it had been turning down

Before moving forward, the two teams sat down with Grasshopper's data and modeled what would happen with GrailPay's risk signals in place. The results pointed to a meaningful jump in approvals, concentrated in the accounts that had been hardest to approve. "By getting secondary transactional insights early on, our team has been able to safely onboard high-potential, complex accounts that we might have previously had to decline," said Liang. "We're able to approve significantly more startups and newly incorporated businesses, which are historically the toughest to evaluate because they lack an established history."

GrailPay gave the team a smarter way to grow this line, with less additional headcount than it would have otherwise taken. “Every single startup that woe get is a huge growth driver to that business,” he said. “Particularly how they grow over time when they're successful.” Early-stage startup accounts hold $1 million to $7 million in deposits. Liang said even a few additional approvals a month add up to a lot over the course of a year.

“We want to be able to say yes to as many small businesses and startups as we can, and a platform like GrailPay allows us to do that.”

Confident, frictionless onboarding is just step one toward a bigger goal: becoming clients' primary bank. “We see GrailPay playing a leading role in helping our bank become a primary bank for all of these SMEs and startups we serve,” Liang said. “Right now, with account holds and funding delays, our potential clients probably don't feel super trusted, and we want to move beyond that. That's a really key way to treat clients well, and it lets us say more yeses to clients who may have been on the borderline before.”

Getting live with GrailPay was unusually fast for banking

GrailPay still went through Grasshopper's full vendor review, the same one applied to any of the more than 200 technology partners the bank has worked with over the past five years. As a regulated bank, Grasshopper holds its charter to very high standards with its regulators, on top of its own internal review process. “The team was super proactive,” Liang said. “They were able to pass everything with flying colors, and we moved faster with GrailPay than the majority of the tech partners that we’ve onboarded in our stack.”

Getting live meant coordinating across several of Grasshopper's existing systems, including its Alloy-powered decisioning workflow, and the full path from first conversation to production took about six months. “That’s very unusual, particularly in the banking space.”

For Liang, that ease of integration mattered beyond the vendor checklist. “As Head of Product, I always want a clear path to market for everything we're launching, and integrations tend to be the hardest thing,” he said. “GrailPay was really good about interacting with our different providers across our ecosystem, which made it easy for me to say yes.”

Complex validations that required manual research now move significantly faster

“Our old process for accounts with limited financial history was super manual,” Liang said. “It involved manually typing into multiple data sources and requiring an analyst to write a report. With GrailPay, we get ACH history and risk data back instantly. It runs automatically in our onboarding system, just like all of our other data sources."

“Now, our risk team can go in and the numbers are already there. It's like magic.”

The time savings show up account by account. Startups and newly formed legal entities used to take an analyst about 30 minutes to validate by hand. “Now, our risk team can go in and the numbers are already there," Liang said. “It's like magic.” That time is going toward other risk work, including transaction monitoring.

The partnership didn't stop at go-live

Grasshopper’s relationship with GrailPay has stayed active well past the initial integration. “Working with the team post-onboarding has been really great,” Liang said. “We have very regular connections with the team, whether that's email or calls.”

Most vendors settle into maintenance mode once an integration is done. GrailPay hasn't. “We got this initial use case live, but there's a lot that we can do in the future, and the GrailPay team has been really proactive about wanting to get those plans out of concept and into reality,” Liang said. “Usually vendors are pretty happy once you get an MVP out, and then slowly iterate. We're seeing a lot more velocity than normal with the GrailPay team, and that brings a ton of energy for our risk team and our product organization.”

Where Grasshopper and GrailPay go from here

“It's been absolutely awesome partnering with GrailPay to bring our new solution to market,” Liang said, “and we're super excited about the future of the partnership.”

Grasshopper isn't done building with GrailPay. Funds still take about five business days to become usable after a client opens an account today, a number that, in Liang's 10 years in the industry, hasn’t moved much. Guaranteed funding is next on the roadmap toward that primacy goal: rather than waiting for ACH to clear and holding funds once they arrive, Grasshopper wants to instantly fund accounts it can already validate with confidence.

“We know clients want their money immediately, with no holds and no delays,” Liang said. “We want to be able to give that to them.” From there, the plan is to extend GrailPay's account validation into ongoing transaction risk, particularly the 30- to 90-day window after a client links a new account, where Liang says the same risk exposure that exists at onboarding shows up again.

For other banks that are hesitant to trust a newer risk vendor, Liang says partners like GrailPay tend to bring fresh thinking to a problem the industry hasn't solved. “The way we've been doing things in the industry for a while hasn't really been working, and I think if you ask any risk team, they'd agree with that. It's worth giving GrailPay a chance. Do a test with your data, run it in the background, give it a shot. You might be really positively surprised with what you see.”