When Darragh Buckley left Stripe to found Increase in 2020, he carried with him a precise diagnosis of fintech's most stubborn structural flaw: the industry had been papering over the inadequacies of legacy banking infrastructure with increasingly sophisticated software, rather than replacing the underlying architecture outright. Six years later, Buckley has executed the most decisive step yet toward his original thesis — acquiring Washington State-based Twin City Bank and, with it, a full banking charter that transforms Increase from a financial infrastructure vendor into a regulated banking institution in its own right.
The deal did not materialize overnight. Following an initial voting share acquisition completed last year, Buckley has now formally taken control of Twin City Bank, completing a transition that positions the San Francisco-based company at a unique intersection of software engineering and primary banking regulation. For an infrastructure provider that already moves, stores, and lends hundreds of billions of dollars on behalf of platforms including Ramp and Stripe itself, the acquisition is less a diversification play than a logical culmination of Increase's founding architecture.
The Middleware Problem, Finally Solved
To appreciate why this matters, it is necessary to understand the operational compromise that has defined fintech infrastructure for the past decade. The dominant model — a modern application programming interface (API) layer sitting atop a legacy core banking system, connected via middleware wrappers — was never designed for the transaction volumes, latency tolerances, or compliance demands of today's high-throughput fintech platforms. The vulnerabilities this architecture introduces are well-documented among engineering and risk teams: asynchronous processing creates balance discrepancies and reconciliation errors; multiple third-party intermediaries widen the attack surface for data breaches and API abuse; and fragmented compliance responsibilities spread across vendors make real-time fraud monitoring and coherent audit trails structurally difficult to achieve under frameworks administered by the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), or the Financial Conduct Authority (FCA) in the United Kingdom.
Increase was designed from inception to solve exactly this problem. By owning both the banking charter and the core infrastructure software, the company can now offer developer teams direct programmatic access to primary payment rails — including the FedNow instant payment network, the Automated Clearing House (ACH) system, real-time gross settlement (RTGS) networks, and wire transfers — without the translation overhead introduced by middleware layers. The architectural consequence is a single-source-of-truth ledger operating in real time rather than through batch updates, materially reducing the risk of state mismatches during high-volume processing events.
Third-Party Risk and the Security Dividend
The security implications of vertical integration are equally consequential. Under traditional partner-bank models, a fintech processing payments or issuing credit must conduct vendor risk assessments across every middleware provider and banking counterparty in its flow — a process that compounds in complexity as transaction volumes grow and regulatory scrutiny intensifies. By consolidating banking capabilities and technical infrastructure under a single chartered entity, Increase collapses what was previously a multi-vendor third-party risk management (TPRM) exercise into a single audit boundary and security perimeter.
The fraud and anti-money laundering (AML) monitoring benefits follow the same logic. Legacy core systems have historically relied on batch-processed fraud detection, meaning suspicious transactions are often flagged after settlement rather than before it. Controlling the charter allows Increase's engineering teams to deploy real-time monitoring directly at the API layer, intercepting anomalous payloads, credential stuffing attempts, or automated transaction tampering before funds move — a capability that was structurally unavailable to middleware-dependent architectures.
A Precedent for the Infrastructure Layer
Increase's move is not occurring in isolation. The acquisition of Twin City Bank reflects a broader pattern taking shape across the fintech infrastructure sector: companies that have spent years building the rails on which consumer-facing products run are now seeking to own the regulatory substrate beneath those rails as well. The calculus is straightforward — at the scale at which Increase operates, moving hundreds of billions of dollars annually, the cost and risk of dependency on external chartered partners begins to outweigh the regulatory and capital burden of holding a charter directly.
What distinguishes Increase from other infrastructure players pursuing similar strategies is the depth of its existing engineering stack. Having already built the plumbing that powers platforms of the caliber of Ramp and Stripe, the company is not acquiring a bank charter to bootstrap banking capabilities — it is acquiring one to remove the final intermediary standing between its software and primary regulatory rails. The Twin City Bank acquisition, modest in terms of the acquired institution's standalone profile, is therefore consequential not for its balance sheet contribution but for the regulatory access it confers.
What This Means for Financial Infrastructure
For compliance leads, security architects, and infrastructure engineers at scaling financial firms on both sides of the Atlantic, Increase's trajectory delivers a pointed message: the era of treating middleware as an acceptable long-term architectural compromise is ending. Regulators across the OCC, FDIC, and FCA have grown increasingly focused on operational resilience, third-party risk, and real-time systemic oversight — requirements that vertically integrated models are inherently better positioned to satisfy than fragmented middleware stacks.
The Buckley playbook — build the infrastructure first, then acquire the charter to own the full stack — may well become a template. As the fintech ecosystem matures and the volume and systemic importance of API-native financial infrastructure grows, the pressure on infrastructure providers to control their full regulatory and technical surface area will only intensify. Twin City Bank was a small community institution in Washington State. Its acquisition may prove to be one of the structurally significant moves in American fintech this decade.
Written by the editorial team — independent journalism powered by Codego Press.
