Virginia’s Community Bank, Blue Ridge, Overcomes Challenges With Fintech Partnerships
The banking industry is no stranger to the challenges and opportunities posed by the rise of fintech. One such example comes from Blue Ridge Bankshares, a community bank based in Richmond, Virginia. After a troubled stint with fintech partnerships, the bank has now been released from a consent order issued by the Office of the Comptroller of the Currency (OCC). This move marks the end of the bank’s foray into Banking as a Service (BaaS) and a return to its roots as a traditional community bank.
A Troubled Venture into Fintech
In 2020, under the leadership of then-CEO Brian Plum, Blue Ridge embarked on a BaaS strategy, establishing partnerships with about 70 fintech companies. However, this venture soon ran into difficulties. In January 2024, the OCC issued a consent order against the bank, citing deficiencies in its anti-money-laundering compliance program and ordering it to enhance its risk-management controls and oversight of its fintech partnerships.
Billy Beale, the current CEO of Blue Ridge, noted that the volume of partnerships had simply exceeded the bank’s capacity to manage them properly. “We just threw BaaS out the door,” he said. “If three or four [partnerships] had been all that the bank had, and we’d managed it right, none of this would have ever occurred.”
Returning to Traditional Banking
Since the OCC’s enforcement action, Blue Ridge has been working diligently to address the issues raised. The bank fully exited its BaaS program by the end of 2024 and has been focusing on rebuilding itself as a traditional community bank. Beale suggested that the bank’s successful exit from the consent order was largely due to its ability to attract skilled risk-management professionals from larger banks.
Christopher Marinac, an analyst at Janney Montgomery Scott, has described this development as positive, noting that the bank can now focus on originating new deposits and loans from both existing and new business customers.
The Way Forward
Blue Ridge Bankshares is now keenly focused on a traditional community bank strategy. Beale stated that the bank is concentrating on making more commercial-and-industrial loans and commercial real estate loans. The bank no longer has loans outside its home state, and has hired relationship managers who live in the markets they serve.
“We’re just trying to grow and trying to hire the right people to do that,” Beale said. The bank’s experience serves as a reminder of the potential risks and rewards when traditional banking and fintech intersect. The challenges faced by Blue Ridge also underscore the importance of robust risk management and regulatory compliance in the rapidly evolving financial services landscape.
For a more detailed account of Blue Ridge Bankshare’s experience, you can read the full article Here.
