Darragh Buckley, founder and CEO of fintech startup Increase and Stripe’s first employee, has reportedly acquired a substantial stake in Twin City Bank, a community bank in Longview, Washington. This move, confirmed by regulatory disclosures, signifies a rare instance of a fintech entrepreneur effectively buying into a traditional bank.
Increase Founder’s Strategic Investment in Twin City Bank
According to a public disclosure by the Federal Reserve Board, Buckley purchased more than 10% of Twin City Bank’s shares, prompting regulatory reporting requirements. While Buckley declined to specify the exact ownership percentage, sources confirm he is not the sole owner but holds a major stake. This acquisition marks his third investment in community banks within Washington state.
Intentions Behind the Bank Stake Acquisition by Increase’s CEO
Industry insiders speculated that Buckley’s investment aimed to bolster Increase’s banking-as-a-service (BaaS) platform, which offers APIs facilitating ACH, wire transfers, and real-time payments for fintech clients like Ramp and Pipe. However, Buckley clarified that Twin City Bank will continue operating as a community-focused institution and is not intended to be Increase’s exclusive banking partner.
Increase’s Role in the Competitive Banking-as-a-Service Market
Increase specializes in providing programmatic access to regulated financial services, partnering with FDIC-insured banks such as Grasshopper Bank and First Internet Bank of Indiana. Unlike many fintechs, Increase does not hold its own banking license due to regulatory challenges. Buckley’s reputation as an engineer and fintech innovator has led other BaaS providers to refer clients to Increase when unable to meet demand.
Community Banks as a Fintech Shortcut to Banking Licenses
In the crowded BaaS sector, some fintech entrepreneurs have opted to acquire community banks directly to bypass reliance on banking partners. Notably, William Hockey’s fintech, Column, acquired Northern California National Bank for $50 million in 2021, and former Block executives acquired Lead Bank in Kansas City. Buckley’s investment aligns with this trend but emphasizes preserving community bank values rather than leveraging the bank solely for fintech operations.
Risks of Fintech-Bank Partnerships Highlighted by Buckley
Buckley expressed caution about fintech partnerships with banks, citing risks illustrated by the 2024 ransomware attack on Evolve Bank, which served numerous fintechs including Affirm and Stripe. The Federal Reserve imposed a cease-and-desist order on Evolve for deficient risk management, underscoring the complexities of sponsor banking relationships.
“Sponsor banking demands specialized capabilities to manage partner risks effectively,” Buckley noted, emphasizing that only dedicated banks should engage in such partnerships. He advocates for community banks’ strengths in relationship-building and local knowledge as key to sustainable growth.
Future Implications of Buckley’s Bank Investment
While Buckley’s current plans do not involve transforming Twin City Bank into Increase’s primary banking partner, the fintech industry will monitor any shifts closely. Despite opposition from competitors who reportedly attempted to influence media coverage negatively, Buckley has secured FDIC approval for his investment, and the transaction is complete.