San Francisco-based fintech Increase has acquired a full banking charter by taking over Twin City Bank, a move that changes how financial infrastructure providers handle risk, compliance, and real-time transactions.
The startup, launched in 2020 by former Stripe engineer Darragh Buckley, built backend systems for platforms like Ramp and Stripe. Owning both the software and the regulatory license lets Increase remove friction between modern API-driven fintech and legacy banking systems.
Middleware has long created problems for fintech companies. These software layers bridge front-end applications and outdated core banking systems, but they come with trade-offs.
Latency issues often occur when asynchronous processing between APIs and legacy systems causes balance discrepancies or delayed ledger updates. Security risks increase as more third-party intermediaries handle payments, identity verification, and account management. Compliance becomes fragmented across vendors, making audits and real-time fraud monitoring harder.
By acquiring Twin City Bank, Increase eliminates these layers. Developers now interact directly with a unified system that combines infrastructure and regulatory oversight instead of routing transactions through middleware and a separate partner bank.
A vertically integrated model transforms transaction flows. Previously, a fintech app connected to an API wrapper, which then interfaced with legacy core banking software before reaching a partner bank. Each step added delays, security gaps, and compliance blind spots.
Increase’s solution simplifies this process. The fintech app connects directly to a native API operating on a real-time ledger owned by the same entity holding the banking charter. This consolidation reduces vulnerabilities, eases audits, and enables inline security checks at the API level rather than relying on batch-processed fraud detection.
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Engineers gain direct access to payment rails like FedNow, ACH, and wire transfers, reducing timeouts and mismatches during high-volume processing. Compliance teams benefit from a single audit boundary instead of assessing multiple vendors. Security teams can monitor activity in real time, catching suspicious transactions before they settle.
The change represents more than a technical improvement. It reflects a broader industry shift where infrastructure becomes as important as the user-facing product. Companies that once outsourced banking operations now bring those capabilities in-house for better control and efficiency.
Teams building financial products now consider whether to rely on a partner bank at all. The traditional trade-off between speed and compliance may no longer apply.
The acquisition makes Increase one of the few infrastructure providers with its own banking charter. Regulators have grown cautious about risks from layered third-party arrangements. Under frameworks like the OCC in the U.S. or the FCA in the U.K., a single entity with end-to-end oversight simplifies accountability.
This development could influence other fintech infrastructure companies. If Increase’s approach succeeds, it may encourage a move away from the partner bank model, especially for businesses handling high transaction volumes.
For now, Increase plans to expand its new capabilities. The Twin City Bank charter provides more than a regulatory foothold—it offers a foundation where software and banking license work as parts of the same system. Real-time monitoring becomes simpler when infrastructure and oversight align.
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