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Stripe’s first employee, the founder of fintech Increase, sort of bought a bank
Darragh Buckley, founder of fintech startup Increase and Stripe's first employee, has purchased a significant stake in Twin City Bank to enhance community banking, without intentions of making it a personal partner bank for Increase. His investment, exceeding 10%, sparked regulatory disclosure. Despite industry pushback, Buckley aims to support the growth of community banks amid a competitive fintech landscape.
Key points
- Darragh Buckley acquired a stake in Twin City Bank, triggering a public disclosure due to the purchase exceeding 10%.
- The deal is aimed at supporting community banking rather than making the bank a partner for his startup Increase.
- Increase operates within the banking-as-a-service (BaaS) sector, servicing other fintechs with financial APIs.
- Buckley's reputation is strong in the fintech space, and he has previously invested in Washington community banks.
- The industry is competitive, and some competitors attempted to undermine Buckley’s efforts by pitching negative press.
- Buckley emphasized the need for community banks to maintain their independent relationships and avoid risky partnerships.
Why it matters
- The move reflects a broader trend in fintech where companies are acquiring banks to offer services independently, similar to recent acquisitions by Plaid and former Block executives.
- The BaaS model is becoming increasingly popular as fintechs seek to bypass traditional banking challenges.
- The emergence of Evolve Bank's ransomware issues highlights the risks associated with fintech partnerships and the necessity for community banks to manage operational risks effectively.
Buckley’s investment in Twin City Bank signals a strategic shift towards strengthening community banking within a competitive fintech environment, contrasting with many startups in the BaaS space looking to integrate banking functions directly.