MVB Bank looks like an ordinary community bank to locals in Fairmont, West Virginia. But in recent years, the company has transformed itself into a fast-growing partner to fintechs across the U.S.
The growth comes from managing banking services for third parties in the online gambling industry and other fields in addition to the eight branches MVB operates in West Virginia and Virginia.
“We were one of the first to spot opportunities in online gaming, and we’re working to keep up as it grows,” said Larry Mazza, MVB’s chief executive, who oversaw the bank’s pivot in 2018 after the Supreme Court struck down the federal ban on sports betting.
In less than a decade, the bank’s employee headcount has soared from a few dozen employees to nearly 500 workers in 39 states, with recent expansion fueled by pandemic lockdowns that increased online sports betting’s popularity.
Despite selling four of its branches in 2020 and another four last year, MVB’s assets have risen sharply in the last five years, from $880 million in mid-2016 to $2.7 billion at the end of the third quarter of 2021.
Between its work for sports betting giants like FanDuel and DraftKings, plus fintech operations like Credit Karma, MVB now supports more than 6 million consumer accounts. It provides instant debit card issuance to digital wallets, along with digital savings and checking accounts.
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Sports betting operations are now open in 22 U.S. states, and 10 more states have passed legislation to enable it, while many states are tightening scrutiny and regulations around online gambling and lotteries.
“To keep up with [know your customer] and other bank regulations, we had to create and acquire our own resources for compliance [and] fraud,” Mazza said.
MVB in 2019 purchased Chartwell Compliance, a specialist in fintech compliance and licensing. The next year, the bank beefed up its fraud-detection capabilities by buying Paladin Fraud.
Last year MVB also bought Trabian Technology, an Indianapolis-based software development firm that creates customized banking systems for commercial customers.
To incubate new fintech companies, last year MVB also established another subsidiary, MVB Edge Ventures, Mazza said.
Currently MVB Edge Ventures manages the company’s banking-as-a-service technology under the name Victor. Its digital bank accounts for gaming and cryptocurrency are called Grand, and a digital casino cash-management service is called Flexia.
“We now have a group of world-class engineers and a diverse client base that’s furthering our transition to a tech-centric business model,” Mazza said.
Mazza expects more competition in the banking-as-a-service niche, as well as in the online gaming industry. The U.K.-based PXP Financial, for example, provides payment acceptance services to gambling companies in nine U.S. states. And some casinos are moving away from cash in favor of digital payments.
But he also expects online gaming and cryptocurrency to provide opportunities for many companies in adjacent markets, including MVB.
“Online gaming is a $150 billion industry, and crypto will be trillions of dollars, and within that, the opportunities for providing payments and banking-as-a-service are pretty large,” said Mazza, whose longtime interests in banking and sports were uniquely suited for MVB’s rise in the sports betting industry.
Starting out as a KPMG auditor, Mazza, a certified public accountant, was hired by Empire National Bank of Clarksburg, West Virginia, as chief financial officer in 1986. By the time he was 29 he was named president of the community bank.
Mazza stayed put while Empire National was purchased by One Valley Bank and then merged with BB&T, which subsequently became Truist after merging with SunTrust.
“I never left, but I learned a lot through a succession of different owners,” Mazza said.
In 2005, Mazza was recruited to lead MVB Bank, as president. A decade later Mazza — now CEO — saw the bank’s growth and profitability hit a wall.
“We were growing loans at a rate of 20% a year, but funding them was tough, and our net interest margin was about 100 basis points under our peers. I could see we couldn’t go on that way. We needed to merge, get acquired, or do something different,” he said.
When MVB invested in BillGO, a Colorado-based fintech enabling digital consumer bill payments, Mazza joined the startup’s board, which he said expanded his vision into how banks could work with fintechs.
Mazza is also the longtime co-owner of Football Talk LLC, a professional football media production company, and he saw business opportunities when the Supreme Court opened the door for states to allow betting on sporting events.
West Virginia was one of the first states to legalize sports betting, and MVB immediately got involved by providing treasury services to local casinos, rapidly expanding to serve online gaming operators in six states. By contrast, many banks steered clear of sports betting even years after states began legalizing the practice.
“We moved fast, figuring that once gaming companies got established they’d be unlikely to switch banks,” Mazza said.
MVB now provides consumer deposit services for more than 40 gaming companies. For Credit Karma, which helps consumers clean up their credit scores through credit and financial management, MVB offers consumers checking and savings accounts and a debit card, according to a Credit Karma spokesperson.
“We have about 100 fintech partnerships altogether, counting clients and vendors and investors,” Mazza said.
Non-interest-bearing deposits now account for nearly 50% of MVB’s deposits, up from 8% seven years ago, and gaming deposits account for about a third of MVB’s deposit base, according to Mazza.
While many banks are seeing revenue from banking-as-a-service, MVB’s focus on the riskier area of online gambling sets it apart, according to Lane Martin, head of U.S. banking and payments for Capco, a global technology and management consultancy.
“Not every bank wants to be behind an online gambling portal and have exposure to complex regulations, but MVB has chosen a path that’s expanding and most importantly, it’s avoiding the fate of many banks whose core services are being commoditized,” Martin said.
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