How Grasshopper Bank Improved Efficiency While Scaling Its Compliance Operations

Key Takeaways

• Hummingbird’s modular platform allows for responsive and efficient scaling
• Customizable workflows support unique procedures for each business line
• Hummingbird Apps enable third-party tool and data source integrations without the need for internal engineering resources
• Streamlined Unusual Activity Report (UAR) referral process from fintech partners. 

Impact Metrics

• Significant time savings for compliance operations globally
• 5.9k reviews completed, an average of 822 per seat
• 105 SAR reports filed
• 6 investigator reviews completed per hour spent on platform

Company Overview

Grasshopper Bank began its journey in 2019 as a digital commercial bank whose mission was to serve the business and innovation economy, most notably focusing on banking venture capital firms and their portfolio companies. When current President & CEO Mike Butler was brought on board in May 2021, the new management team kept that mission intact but expanded the Bank’s vision to work with a broader client set and diversify its balance sheet. Today, Grasshopper still serves the venture and private equity ecosystem, but now also banks small and medium-sized businesses (SMBs), financial technology (fintech) companies, and startups.

Since launching these new lines of business in early 2022, the Bank has grown from total assets over $200 million to nearly $900 million as of the second quarter of 2024. 

The Problem

While intense business growth was great for Grasshopper as a company, the rapid scaling and extension of new business lines presented the compliance team with a definite challenge. 

“Our main focus became efficiency – we simply weren’t going to do anything that wouldn’t scale,” said Jason Boova, BSA Officer. “But with all of our growth, we also needed to quickly gain appropriate oversight over these new, digital channels we had created for our clients.” Pursuing digitization was complicated further by the fact that Grasshopper had multiple client types, such as clients using the Bank for small business checking and savings, clients obtaining financing through the Small Business Administration (SBA) program or conventional financing to purchase or develop commercial real estate, as well as Banking-as-a-Service (BaaS) fintech partners and their customers, all which effectively operate in different channels. The challenge for the Grasshopper BSA team was to centralize the data across those channels, in order to increase efficiency and effectiveness of ongoing compliance monitoring.

At this point in its search for a solution, Grasshopper could easily have chased each client segment down its own path. However, the BSA team decided to essentialize their focus on case management. “At the core of it,” Boova noted, “was the idea that the identification of suspicious activity can come from many different channels, and we need a place to centralize the collection and review of that activity. With that as our starting point, we realized that the only thing we were missing was a mechanism capable of managing that process across all of our different workflows.” 

Hummingbird: applications for every compliance use case

In the end, it was the need for flexibility – both at scale and in terms of capability – that made Hummingbird the top choice. Grasshopper found immense value in Hummingbird’s customizable workflows, which allowed them to tailor their review processes according to the specifics of each client segment. 

“We experienced nearly 500% growth in assets over a relatively short period. We certainly weren’t expecting to hire 500% more people in that same time period, so Hummingbird was a big part of how we stayed proactive about managing our compliance program as we scaled.” –Jason Boova, BSA Officer

The Hummingbird App marketplace gives Grasshopper Bank the ability to add new tools and data integrations according to their needs.

Also factoring into the decision was Hummingbird’s modular design, as well as its network of apps and integrations. With a number of vendors in its tech stack, Grasshopper saw immediate value in Hummingbird’s ability to easily integrate and centralize these different, third-party data sources. Alerts from Grasshopper’s transaction monitoring partner could easily be flowed into the platform, while a Tableau integration enriches cases with additional subject and transaction data whenever necessary. 

The Bank Partner referrals app gives Grasshopper bank powerful collaboration tools to use with its fintech partners. (Note: demo environment shown.)

For its fintech clients with a need to refer to Unusual Activity Reports (UARs), Grasshopper deployed Hummingbird’s Bank Partner Referrals app. Thanks to this integration, both Grasshopper and its fintech clients are able to take advantage of Hummingbird’s unique collaboration tools. The app gives both parties an up-to-date, shared view of case information while also making the process of escalating UARs to Suspicious Activity Report (SAR) filings fast and seamless. Thanks to the app, Grasshopper has everything they need to maintain effective oversight, coordinate investigation work, and ensure consistent case referrals. 

Positive results, continuous refinement

Hummingbird's analytics capabilities help Grasshopper Bank track productivity and manage team performance. (Note: demo environment shown.)

As its business has grown, Grasshopper has seen its number of triggered alerts grow as clients transact using their Bank accounts. Thanks to Hummingbird, however, Grasshopper’s investigators have been effectively able to clear these alerts. In Hummingbird, these alerts are grouped into fewer (but more comprehensive) cases, allowing their team to investigate related activity in a single case, saving a significant amount of time for investigators who previously needed to clear a mountain of single-alert cases. They’re able to instead spend that time working cases with greater clarity. 

“What I’ve really liked about Hummingbird is that the UI gives you that crystal-clear snapshot of what’s going on – from active AML cases and SAR filings down to EDD reviews and UAR partner referrals. It’s made a huge impact on our day-to-day operations, because we’re able to allocate time more effectively and work these alerts in the most efficient manner possible.” —Alena Robertson, BSA Manager 

Further enhancing its compliance operations, Grasshopper investigators take full advantage of Hummingbird’s robust toolset, employing automations to speed up manual processes and the platform’s collaboration tools for fast and secure communication. Report quality has also seen improvement, with Hummingbird’s automated validation checks, contributing to zero rejected reports in the three years since Hummingbird’s implementation. Additionally, Grasshopper also makes good use of the analytics and review downloads dashboards, which allow them to quickly and comprehensively package case data to be passed along to partners, board members, or as part of the audit process. 

Wrap-up

Across a wide scope of compliance operations, Hummingbird has proven itself essential to Grasshopper’s ability to effectively mitigate risk while proactively matching pace with the rapid expansion of the Bank’s business. With its modular design and wide range of features and apps and integrations, Hummingbird serves as Grasshopper Bank’s system-of-record for compliance operations, positioned at the heart of an effective, efficient program.