Former Radius chief brings fintech mentality to New York de novo

0
11

Michael Butler is ready to shape the future of Grasshopper Bank, a New York de novo that just started its third year.

Butler, who recently stepped down as CEO of Radius Bank after the Boston bank’s February sale to LendingClub, became the $228 million-asset Grasshopper’s president and CEO earlier this month, succeeding Judith Erwin.

During 13 years at the helm of Radius, Butler focused heavily on fintech partnerships to turn the bank into a cutting-edge, digital-only bank. While Grasshopper isn’t in need of a sweeping makeover, Butler said he is eager to collaborate with fintechs to add more products and services to the de novo’s core business banking platform.

“What I found is I got a kick out of — and some people thought I was pretty good at — building the bank, taking it to the next level,” Butler said of his time at Radius.

Grasshopper was conceived as a digital-first small-business lender. Butler, who credits Erwin with laying a solid foundation, plans to stay the course, noting that Radius had begun studying a pivot into small-business lending about two years ago, before the coronavirus pandemic and the bank’s sale to LendingClub.

“This is what I wanted to do next,” Butler said. “Grasshopper is all about business. It’s like jumping into something we’ve already been engaged in.”

Though Grasshopper has built a growing business around serving venture capital firms, the pandemic hampered efforts to widen its scope, Butler said. He plans to round out Grasshopper’s offerings by targeting smaller businesses whose owners wear multiple hats.

“The companies we want to work with are the ones where the owner is the CEO, the CFO and the CMO,” Butler said. “The guys that are running these businesses have a technology bias. They’re technophiles. … We’re probably more interested in the microbusinesses than the macrobusiness side.”

As he did at Radius, Butler expects to rely on fintech partnerships to deploy new products and services.

Radius forged dozens of fintech relationships during Butler’s tenure, offering checking accounts to clients of the challenger bank Aspire, building an online account-opening platform with Mantl and providing accounting solutions to customers with Autobooks.

“No one is going to beat me in venture, no one is going to beat me in deposit gathering and no one is going to beat me in some lending opportunities,” Butler said. “But they can beat me somewhere else, and I’ll partner with them. I’ll embrace it.”

Butler’s pursuit of fintech partners that could help drive Radius’s digital transformation put him out front of most of his peers.

“The word around the industry is how visionary that bank has been with its partnerships from early on,” said Wayne Brown, a managing partner at the Walker Group, a New York management consulting firm.

Radius “opened the door” for similar-sized banks to work with fintechs, Brown added.

Over time, the strategy has matured into a critical part of the financial services landscape, impacting all aspects of bank operations, said Charles Potts, chief innovation officer at the Independent Community Bankers of America.

“A lot of these partnerships started out as deposit gathering — let’s put a new account on a prepaid card and call that a fintech-bank offering,” Potts said. “Now, they’re very granular. They’re very segmented. Bankers see the need to address all aspects of the communities they serve.”

The $2.6 billion-asset MVB Financial in Fairmont, West Virginia, disclosed last week that it hired ConnexPay co-founder Jacob Eisen to serve as its fintech president. Moves like that serve as a testament to the growing emphasis banks are placing on fintech partnerships, Potts said.

“I would tell you there are probably more banks out there doing it than people readily appreciate,” Potts said. “We see more chief innovation officers and directors of innovation in banks of all sizes. It’s a profound indicator of how community banks have embraced this as part of their life’s blood.”

Butler, who played a central role negotiating Radius’s $185 million sale to LendingClub, said he wishes the merged company well from his new perch. “LendingClub has a great opportunity to grow and be successful — which they will be,” he said.

Now, Butler’s job is to create the same effect at Grasshopper, which has yet to post a quarterly profit. Grasshopper, which raised $131 million of capital before opening in May 2019, lost $4.9 million in the first quarter.

“We’ve got very clear plans in place to add digital products and services that would round out the organization,” Butler said. “We’re going to run a profitable bank. We’ve had a little bit of a delay, but we’ll get there.”

People throughout the industry will be tracking Butler’s progress, Brown said.

“All of us that are involved [in bank-fintech partnerships], we’re watching Grasshopper,” Brown said. “It’s an example we all want to be successful.”