Increase CEO Darragh Buckley Acquires Stake in Twin City Bank
In a noteworthy move within the fintech sector, Darragh Buckley, the founder and CEO of Increase, has been working towards acquiring a bank for years. Recently, he achieved a significant milestone by purchasing a substantial stake in Twin City Bank, a small community bank located in Longview, Washington.
Details of the Acquisition
According to an insider from the industry, Buckley’s investment was enough to surpass the 10% ownership threshold, triggering a public disclosure requirement by the Federal Reserve Board. While Buckley confirmed the agreement to TechCrunch, he declined to disclose the exact percentage of his stake. Regardless of whether it’s 11% or a majority share, he is now recognized as a significant shareholder in Twin City Bank.
Industry Reactions and Speculations
Speculation within the fintech community suggests that Buckley’s intent is to further the ambitions of Increase. However, his competitors seem keen to undermine his efforts; a mysterious entity allegedly hired an agency to generate negative press related to Buckley’s acquisition.
A Commitment to Community Banking
Buckley has emphasized that his investment in Twin City Bank is not about consolidating power but rather about supporting community-focused banking. He stated, “Twin City Bank is and will remain community-focused.” This clarifies his intent to foster growth within the local banking ecosystem rather than altering its foundational principles.
The Role of Increase in Fintech
Increase offers a programmatic API platform that facilitates various financial services, including automated transactions, real-time payments, and wire transfers. Primarily serving other fintech companies such as Ramp, Check, and Pipe, Increase collaborates with banks to deliver these regulated services efficiently.
Challenges in the Banking-as-a-Service (BaaS) Market
As the BaaS sector becomes increasingly competitive, some fintech firms are opting to acquire small community banks directly. This strategy aims to eliminate the need for intermediary banking partners while gaining direct control over operations. A notable example includes William Hockey, co-founder of Plaid, who acquired Northern California National Bank for $50 million.
The Importance of Risk Management
Buckley is acutely aware of the risks associated with fintech partnerships. He pointed out the dangers posed by sponsoring banks that must manage partners effectively. Recent incidents, like the ransomware attack on Evolve Bank, highlight the vulnerabilities in the sector, prompting Buckley to advocate for specialized banks that can ensure diligent oversight and risk management.
The Future of Community Banks
Despite the prevailing belief in the fintech industry that community banks struggle to thrive independently, Buckley believes in their strength. “The connections and insights of community banks are their true assets,” he remarked. As Buckley forges ahead with his investment in Twin City Bank, he remains open to the evolving landscape while ensuring the institution retains its community focus.