Stripe's first employee and founder of fintech Increase somewhat purchased a bank

Darragh Buckley buys stake in Twin City Bank, exceeding 10%, amidst fintech market strategies.

: Darragh Buckley, the founder of fintech startup Increase, acquired a significant stake in Twin City Bank, a small community bank in Longview, Washington. This acquisition, large enough to warrant a Federal Reserve Board disclosure, appears to be part of a larger trend where fintech companies purchase banks to circumvent traditional banking partnerships. Despite speculation, Buckley insists the acquisition is to support community banking rather than to personally benefit Increase. The fintech scene is closely monitoring Buckley's actions due to the competitive and crowded banking-as-a-service sector.

Darragh Buckley, known for being the first employee at Stripe, has made headlines with his recent purchase of a significant stake in Twin City Bank. This community bank is located in Longview, Washington, which positions it strategically close to Portland, Oregon. The size of Buckley's investment, exceeding 10%, triggered a Federal Reserve Board disclosure due to its significance. Discussions within the fintech community highlight the strategic advantages Buckley could gain for his startup, Increase, which provides banking-as-a-service (BaaS) solutions. His motivations, however, appear to be rooted in a passion for supporting community banks, which he views as underdogs in the banking sector.

Notably, Buckley has declared this move as part of a broader interest in community banks rather than a direct attempt to integrate banking services with Increase. "Twin City Bank is, and will remain, a community-focused bank," Buckley asserted. This investment marks his third in a Washington community bank, reinforcing his commitment to preserving the independent function of these financial institutions. The fintech industry, however, remains skeptical, speculating on the potential impact this may have on Increase's operations and its competitive edge in the BaaS market.

The fintech sector is well-known for its reliance on partnerships with FDIC-insured banks to offer regulated services like real-time payments and automated clearing house transactions. This is primarily due to the difficulties and expenses associated with obtaining banking licenses independently. Fintechs like Chime have demonstrated this dependency by collaborating with partner banks to provide financial services. However, a strategic shift is occurring as some fintech companies, like Buckley's competitor Plaid, purchase community banks directly to circumvent these partnerships and regulatory challenges.

This trend has raised questions about the inherent risks associated with such strategic pivots. For instance, Evolve Bank, a partner to various fintechs, was targeted in a major ransomware attack in 2024, underlining vulnerabilities in fintech-bank partnerships. Buckley emphasizes that Twin City Bank should not become a partner bank for fintechs; instead, he advocates for specialized banks to handle the specific demands of sponsor banking safely.

Among the fintech community, there is consensus that Buckley's move could reshape the landscape of BaaS. His investment has not only garnered attention for its potential industry implications but has also drawn opposition from rivals, as evidenced by attempts to fuel negative press surrounding the transaction. Despite this opposition, Buckley has secured FDIC non-objection approval for his investment, solidifying his position and intentions.

Sources: TechCrunch, Federal Reserve Board

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