Zopa Explained

Zopa Bank Ltd.
Type:Ltd.
Founders:Richard Duvall
James Alexander
Giles Andrews
David Nicholson
Tim Parlett
Hq Location:Cottons Centre
Hq Location City:Tooley Street, London
Hq Location Country:United Kingdom
Key People:Jaidev Janardana (CEO)[1]
Industry:Personal financial services
Products:P2P lending,[2] retail banking
Foundation:[3]

Zopa Bank Ltd. (pronounced as /ˈ/[4]) is a British online bank which offers deposit accounts, personal loans and credit cards. It began as the world's first peer-to-peer lending company in 2005 and gained a full banking licence in 2020. The peer-to-peer side of its business closed in December 2021.

History

Zopa was launched in the UK in March 2005 as an arranger of peer-to-peer lending, connecting investors with individuals seeking loans.[5] [6] It was founded in Buckinghamshire in 2004 by a team from the internet banking company Egg Banking.[7] [8]

Zopa grew steadily[9] in the years prior to the financial crisis of 2007–2008. It navigated the period with no losses to investors' capital and only a small dip in returns during 2008.[10] [11]

In September 2016, the first portfolio of Zopa loans was securitised on the European markets.[12]

In January 2017, Zopa became the first UK based peer-to-peer lending company to lend more than £2 billion worth of loans.[13] Zopa became fully regulated by the Financial Conduct Authority in May 2017.[14] [15] Following FCA authorisation, and HMRC approval as an Individual Savings Account (ISA) manager, Zopa started offering Innovative Finance ISA products in June 2017.[16]

In November 2016, Zopa announced its intention to apply for a banking licence so it could expand the range of financial products it offers to UK consumers.[17] [18] In August 2018, Zopa obtained £44 million in funding for the launch of its new digital challenger bank.[19] In December 2018 the company was awarded interim banking licences by the UK financial regulators, the FCA and PRA.[20]

Retail banking services – including deposit accounts and a credit card – were launched in June 2020, soon after a full banking licence was awarded.[21] By March 2021, Zopa had attracted around £250m in fixed-term savings accounts and had become a "top ten" credit card issuer. In the same month, the company raised £20m further capital from its existing lenders.[22]

In June 2021, CEO Jaidev Janardana stated that Zopa could be taken public as early as the last quarter of 2022.[23] In October of that year, the company raised $300million from Softbank Vision Fund and other investors, implying a $1billion valuation.[24] A further £75m was raised from existing investors, not including Softbank, in early 2023.[25]

In December 2021, Zopa announced it would be winding up the peer-to-peer side of its business, including buying back the existing loans of investors.[26]

In early 2023, Zopa had around 850,000 customers, over £3billion in deposits and £2billion on loan. The company indicated that it expected to make a profit over the full year for the first time in its history.

In February 2023, it was announced Zopa had acquired the Newcastle-under-Lyme-headquartered, 'buy now, pay later’ (BNPL) platform DivideBuy.[27]

Products and services

Peer-to-peer lending

Zopa enabled investors to lend to UK consumers through its peer-to-peer lending platform.[28] By 2021, around £6billion in loans had been processed. Borrowers could take out loans between £1,000 and £25,000.[29] Typically individuals used these to funds to help buy a car, consolidate debts, cover home improvements or weddings.[30]

Investors could choose from four investment products[31] based on their risk and return appetite. Investors' money was split across multiple borrowers.[32] Investors then received monthly repayments of interest and capital, which they could re-lend to compound the interest.

In December 2021, Zopa announced that it would withdraw from peer-to-peer lending with the intent to repay all investors no later than 31 January 2022.

Banking and credit cards

Zopa offers FSCS-protected deposit accounts, personal loans, credit cards,[33] and a money management app which makes use of data made available by the introduction of Open Banking.[34]

Corporate identity

The company's main office is at London Bridge.[35] Since 2017, Zopa also has a development centre in Barcelona, Spain.[36]

The company's name comes from "zone of possible agreement", a negotiating term identifying the bounds within which agreement can be reached between two parties.[37]

See also

Notes and References

  1. Web site: Zopa CEO Jaidev Janardana: Leading UK P2P Lending with Superior Service, Transparency and Cutting-Edge Fintech . McGill University.
  2. News: Scott. Mark. A Lift for One of London's Financial Tech Start-Ups. 9 March 2017. The New York Times Company. DealBook. New York Times. 9 June 2014. New York, N.Y., United States. B3. en.
  3. News: Akst. Daniel. Where Lender Meets Borrower, Directly. 9 March 2017. The New York Times Company. Business Day. New York Times. 5 February 2006. New York, N.Y., United States. en.
  4. Web site: Zopa. Why you should join Zopa: a message from our new Chief People Officer. live. https://web.archive.org/web/20240130014925/https://www.youtube.com/watch?v=ZFmlKjf69e0. 2024-01-30. 2021-10-15. 2024-01-30. YouTube.
  5. News: Prosser. David. Happy Birthday Zopa, The Inventor Of P2P. en. Forbes. 2018-04-11.
  6. News: 7 March 2005. Q&A: Online lending exchange. en. BBC News. BBC. United Kingdom. 4 July 2016.
  7. News: Evans. Judith. 14 August 2015. My Money — Giles Andrews, Zopa chief. en. Financial Times. Nikkei. 8 March 2017.
  8. Web site: Zopa opera. 2015-10-03. computing.co.uk. 6 September 2007.
  9. Web site: P2P lending: where will the P2P industry go next? - Verdict. www.verdict.co.uk. 19 February 2018. en-GB. 2018-04-11.
  10. News: Ficenec. John. 2015-07-26. How safe is peer-to-peer lending?. en-GB. The Daily Telegraph. 2018-04-11. 0307-1235.
  11. Web site: Jones. Rupert. 2014-02-15. The major peer-to-peer lenders. 2018-04-11. The Guardian. en.
  12. News: Hale. Thomas. 26 September 2016. Debut securitisation for Zopa loans. en. Financial Times. Nikkei. United Kingdom. 10 November 2016.
  13. News: Peer-to-peer lender Zopa passes £2 billion loans milestone. Business Insider. 2018-04-11.
  14. News: Williams. Aime. Zopa gets FCA approval as peer-to-peer lender. Financial Times. 15 May 2017.
  15. News: Barber. Lynsey. 2017-05-11. Zopa just got full approval as a P2P lender from the FCA. en. City A.M.. 2018-04-11.
  16. News: Zopa Isa offering up to 6.1pc finally available. Suter. Laura. 2017-05-26. The Telegraph. 2018-04-11. en-GB. 0307-1235.
  17. News: Hurley. James . 2016-11-17. Peer-to-peer lender Zopa to launch bank. en. The Times. 2018-04-11. 0140-0460.
  18. News: Dunkley. Emma. 16 November 2016. Peer-to-peer lending pioneer seeks banking licence. Financial Times.
  19. News: 2018-08-03. Digital Bank: Zopa Raises £44 Million to Help Fuel Expansion, "Launching Our Bank is a Key Next Step". en-US. Crowdfund Insider. 2018-08-07.
  20. News: Zopa, the UK P2P lending company, secures bank license. en-US. TechCrunch. 2018-12-04.
  21. News: Megaw. Nicholas. 2020-06-23. P2P lender Zopa wins UK banking licence. Financial Times. 22 September 2020.
  22. News: Lanyon. Daniel. 22 March 2021. Zopa raises £20m to expand digital bank, eyes profits. 2021-03-27. AltFi. en.
  23. Web site: Finn. Aisling. 29 June 2021. Zopa is setting its sights on a 2022 IPO. 2021-07-07. AltFi.
  24. Web site: Lunden. Ingrid. 18 October 2021. Zopa raises $300M at a $1B valuation to expand its P2P lending and savings neobank in the UK. 2021-10-23. TechCrunch. en-US.
  25. Web site: Lunden . Ingrid . 2023-02-02 . Zopa, the UK neobank, raises $93M more at a $1B+ valuation . 2023-02-04 . TechCrunch . en-US.
  26. Web site: 7 December 2021. Zopa exits peer-to-peer lending. 2021-12-07. AltFi.
  27. Web site: Zopa acquires BNPL DivideBuy . 2023-02-16 . AltFi . en.
  28. News: Peer to peer lending: boost savings returns? - MSE. Lewis. Martin. MoneySavingExpert.com. 2018-04-11. en.
  29. Web site: comparethemarket.com - Zopa loans. www.comparethemarket.com. en-gb. 2018-04-11.
  30. News: Werdigier. Julia. 10 December 2012. RIT Capital to Take Stake in British Financial Start-Up. en. The New York Times. The New York Times Company. DealBook. New York, N.Y., United States. 9 March 2017.
  31. News: P2P platform Zopa re-opens to new customers. Beioley. Kate. Financial Times.
  32. Web site: Peer-to-peer lending explained - Which?. Which?. 21 June 2016. en. 2018-04-11.
  33. News: Zopa is 'pretty close to finishing' building its new bank. en. Business Insider. https://web.archive.org/web/20171018062945/http://uk.businessinsider.com/zopa-ceo-jaidev-janardana-on-building-a-new-bank-2017-10. dead. 18 October 2017. 2018-04-11.
  34. News: Zopa boss Janardana details plans for customer-centric bank - AltFi Opinion. en-GB. AltFi. 2018-04-11.
  35. News: Hurst. Samantha. Zopa Relocates: Moves Into New London Bridge Digs. Crowded Media Group. Crowdfund Insider. 4 August 2016. en.
  36. News: 2017-06-07. Zopa Establishes Development Center in Barcelona. en-US. Crowdfund Insider. 2018-05-15.
  37. News: Cave. Andrew. 2016-03-05. Zopa aims for enough growth to stop explaining its name. en-GB. The Daily Telegraph. 2018-04-11. 0307-1235.

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