How a Fintech Innovator Quietly Secured Ownership in a Community Bank
Within the fintech landscape, speculation has long surrounded Darragh Buckley, founder and CEO of Increase, regarding his intention too acquire a banking institution. This speculation materialized recently when he obtained a significant ownership interest in Twin City Bank, a community bank located in Longview, Washington.
Strategic Investment in Local Banking
The acquisition involved more than 10% ownership, triggering mandatory disclosure to the Federal Reserve Board and requiring approval from the FDIC. Although Buckley has not publicly disclosed the exact percentage of his stake,insiders confirm that he is now among the principal shareholders. This places him within an influential group as public companies must report holdings exceeding 5%.
Buckley stresses that Twin City Bank will maintain its commitment as a community-oriented financial institution rather than transforming into an extension of Increase’s banking-as-a-service (BaaS) platform. Despite skepticism from competitors and attempts at negative publicity, this marks Buckley’s third investment in Washington state community banks-demonstrating his sincere dedication to nurturing local banking ecosystems.
“Community banks excel through strong local ties and deep-rooted expertise,” Buckley explains. “Fintech often underestimates their potential for sustainable growth.”
The Evolution and Complexities of Banking-as-a-Service
Increase functions as an API-centric platform facilitating services such as automated clearing house (ACH) transactions, wire transfers, and instant payments for fintech clients including Ramp and Pipe. Founded by Stripe’s earliest employee-renowned for extraordinary engineering prowess-Increase commands respect within fintech circles; even some BaaS competitors refer clients they cannot accommodate directly.
The majority of BaaS providers depend on partnerships with FDIC-insured banks because acquiring full banking charters independently remains prohibitively expensive and complex. For example, Chime recently went public but continues relying on partner banks to meet regulatory requirements.
Currently, Increase partners with Grasshopper Bank and First Internet Bank of Indiana without any personal investments from Buckley in those entities.
A growing Movement: Fintechs Acquiring Banks Directly
The competitive environment has driven certain fintech leaders to bypass conventional partnerships by purchasing small community banks outright-a tactic aimed at gaining greater control over regulated financial services. In 2021, William Hockey co-founder of Plaid acquired Northern California National Bank for $50 million via his venture Column Capital. Similarly, lead Bank in Kansas City was purchased by former Block executives Jackie Reses (CEO) and Ronak Vyas (CTO).
Potential Pitfalls Within Fintech-Bank Collaborations
Buckley warns against expanding Twin City into a sponsor bank overloaded with multiple fintech clients due to inherent risks associated with such models:
- Evolve Bank-a partner serving numerous fintechs including Affirm and Stripe-suffered a major ransomware attack earlier this year compromising sensitive data impacting millions of customers worldwide.
- This breach followed regulatory scrutiny where the federal Reserve issued cease-and-desist orders demanding thorough improvements after identifying critical weaknesses within Evolve’s risk management systems.
- Evolve was also indirectly connected to Synapse’s collapse-a baas startup backed by prominent investors-that left roughly 10 million consumers financially exposed.
“Sponsor banking requires specialized expertise for safely managing partner relationships; only dedicated institutions should assume this duty,” emphasizes Buckley.
An Investment Driven by Conviction Over Convenience
This acquisition is less about leveraging Increase’s platform capabilities but more about honoring smaller financial institutions often overlooked amid rapid digital transformation trends.
Twin City embodies what many consider “the backbone” of American finance: personalized service rooted deeply in local knowledge rather than sheer scale.
Buckley’s outlook: “community banks possess unique advantages that warrant renewed focus.”
The Future Outlook: Implications for Financial Services Innovation
The possibility remains open whether Twin City’s operations will eventually integrate more closely with Increase or othre ventures within the BaaS ecosystem-but industry observers are watching closely given how uncommon it is for startups focused primarily on technology platforms to own chartered entities.
Buckley’s recent receipt of FDIC non-objection approval confirms regulatory confidence granting him full control rights over his stake.
No opposition efforts have reversed what is now finalized-the transaction closed successfully despite attempts from unnamed rivals seeking disruption through media campaigns targeting him personally or professionally.
This milestone highlights increasing convergence between traditional banking frameworks & emerging tech-driven financial services exploring innovative pathways beyond conventional partnership models alone.
