It’s been an open secret in fintech circles that Darragh Buckley, founder and CEO of the banking-as-a-service (BaaS) startup Increase, has long aimed to “buy a bank.” Recently, he effectively achieved this by purchasing a substantial stake in Twin City Bank, a community bank based in Longview, Washington.
Buckley’s purchase was significant enough to trigger a public disclosure by the Federal Reserve Board, a requirement for ownership exceeding 10%. While the exact size of his stake remains undisclosed, any ownership over 10% establishes him as a major shareholder. Buckley confirmed the investment but emphasized that he is not the sole owner and that Twin City Bank remains community-focused.
Industry Speculation and Opposition
Industry insiders assumed Buckley’s move was to bolster Increase’s ambitions. However, Buckley clarifies this is not an effort to transform Twin City into Increase’s banking partner. Surprisingly, a competitor allegedly opposed the deal so strongly they hired a firm to push negative press about Buckley and the acquisition. Despite this, Buckley notes that this investment is his third in a Washington community bank and his intentions are misunderstood.
Increase provides an API platform powering financial services like automated clearing house transactions, wires, and real-time payments, serving fintech companies such as Ramp, Check, and Pipe. Founded by Buckley—Stripe’s first employee—the company is respected within fintech circles and even receives referrals from competitors unable to handle certain clients.
Increase partners with FDIC-insured banks like Grasshopper Bank and First Internet Bank of Indiana, though Buckley holds no personal investment in these institutions. Given the challenges and costs of acquiring banking licenses, many BaaS providers rely on partnerships with banks. However, the competitive market has pushed some fintechs to acquire small community banks outright to bypass reliance on partners.
Risks of Sponsor Banking and Buckley’s Approach
Buckley stresses he does not plan to use Twin City Bank as Increase’s partner bank or flood it with fintech clients, acknowledging the risks in such arrangements. Recent incidents, such as a ransomware attack on Evolve Bank (a fintech partner bank), highlight vulnerabilities when banks handle numerous fintech partnerships.
“Twin City Bank shouldn’t support sponsor banking,” Buckley said. “Sponsor banking requires very specific capability and capacity to supervise partners safely and soundly. Only specialized banks should do it.”
Buckley expressed a deep appreciation for community banks, which he describes as underdogs with unique strengths rooted in relationships and local knowledge. He challenges the fintech industry’s notion that community banks lack growth potential on their own.
If Buckley’s plans for Twin City Bank evolve, the fintech community will be watching closely. Meanwhile, the deal has cleared the FDIC’s “non-objection for control” approval and has officially closed, despite opposition.
What The Author Thinks
This investment signals a thoughtful shift in fintech’s approach to banking partnerships. Instead of relying solely on traditional sponsor banks, fintech leaders like Buckley recognize the untapped potential in community banks. By supporting these local institutions rather than subsuming them, there’s a chance to blend innovation with grounded, trusted banking relationships. This could reshape how fintech and traditional banks collaborate moving forward.
Featured image credit: ClickerHappy via Pexels
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