Zopa

Last updated

Zopa Bank Ltd.
Type Ltd.
IndustryPersonal financial services
FoundedMarch 2005;18 years ago (2005-03) [1] [2]
FoundersRichard Duvall
James Alexander
Giles Andrews
David Nicholson
Tim Parlett
HeadquartersCottons Centre,
Tooley Street, London
,
United Kingdom
Key people
Jaidev Janardana (CEO) [3]
Products P2P lending, [4] retail banking
Website www.zopa.com OOjs UI icon edit-ltr-progressive.svg

Zopa Bank Ltd. 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.

Contents

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 $300 million from Softbank Vision Fund and other investors, implying a $1 billion 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 £3 billion in deposits and £2 billion on loan. The company indicated that it expected to make a profit over the full year for the first time in its history. [25]

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 £6 billion in loans had been processed. [24] 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. [2]

Investors could choose from four investment products [30] based on their risk and return appetite. Investors' money was split across multiple borrowers. [31] 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 [26] 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, [32] and a money management app which makes use of data made available by the introduction of Open Banking. [33]

Corporate identity

The company's main office is at London Bridge. [34] Since 2017, Zopa also has a development centre in Barcelona, Spain. [35]

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. [36]

See also

Related Research Articles

Peer-to-peer lending, also abbreviated as P2P lending, is the practice of lending money to individuals or businesses through online services that match lenders with borrowers. Peer-to-peer lending companies often offer their services online, and attempt to operate with lower overhead and provide their services more cheaply than traditional financial institutions. As a result, lenders can earn higher returns compared to savings and investment products offered by banks, while borrowers can borrow money at lower interest rates, even after the P2P lending company has taken a fee for providing the match-making platform and credit checking the borrower. There is the risk of the borrower defaulting on the loans taken out from peer-lending websites.

LendingClub is a financial services company headquartered in San Francisco, California. It was the first peer-to-peer lender to register its offerings as securities with the Securities and Exchange Commission (SEC), and to offer loan trading on a secondary market. At its height, LendingClub was the world's largest peer-to-peer lending platform. The company reported that $15.98 billion in loans had been originated through its platform up to December 31, 2015.

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Lendico was a multinational company, operating a peer-to-peer lending platform. It was taken over by Dutch bank ING Groep in early 2018 and now operates as a subsidiary. The international online marketplace for business and consumer lending was founded in December 2013 by the incubator and venture capitalist, Rocket Internet. After launching in Germany, the company expanded into Spain, Poland, Austria, South Africa, the Netherlands and Brazil. Using the crowdfunding model, the company based in Berlin, Germany, directly connects investors and private and business borrowers. Lendico is led by Friedrich Hubel and co-founder Clemens Paschke. Currently, Lendico Brazil still exists but is an independent company from Lendico Global Services.

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References

  1. ↑ Akst, Daniel (5 February 2006). "Where Lender Meets Borrower, Directly". New York Times. No. Business Day. New York, N.Y., United States. The New York Times Company. Retrieved 9 March 2017.
  2. 1 2 Werdigier, Julia (10 December 2012). "RIT Capital to Take Stake in British Financial Start-Up". The New York Times . No. DealBook. New York, N.Y., United States. The New York Times Company. Retrieved 9 March 2017.
  3. ↑ "Zopa CEO Jaidev Janardana: Leading UK P2P Lending with Superior Service, Transparency and Cutting-Edge Fintech". McGill University .
  4. ↑ Scott, Mark (9 June 2014). "A Lift for One of London's Financial Tech Start-Ups". New York Times. No. DealBook. New York, N.Y., United States. The New York Times Company. p. B3. Retrieved 9 March 2017.
  5. ↑ Prosser, David. "Happy Birthday Zopa, The Inventor Of P2P". Forbes . Retrieved 11 April 2018.
  6. ↑ "Q&A: Online lending exchange". BBC News . United Kingdom: BBC. 7 March 2005. Retrieved 4 July 2016.
  7. ↑ Evans, Judith (14 August 2015). "My Money — Giles Andrews, Zopa chief". Financial Times. Nikkei. Retrieved 8 March 2017.
  8. ↑ "Zopa opera". computing.co.uk. 6 September 2007. Retrieved 3 October 2015.
  9. ↑ "P2P lending: where will the P2P industry go next? - Verdict". www.verdict.co.uk. 19 February 2018. Retrieved 11 April 2018.
  10. ↑ Ficenec, John (26 July 2015). "How safe is peer-to-peer lending?". The Daily Telegraph . ISSN   0307-1235 . Retrieved 11 April 2018.
  11. ↑ Jones, Rupert (15 February 2014). "The major peer-to-peer lenders". The Guardian . Retrieved 11 April 2018.
  12. ↑ Hale, Thomas (26 September 2016). "Debut securitisation for Zopa loans". United Kingdom: Financial Times. Nikkei. Retrieved 10 November 2016.
  13. ↑ "Peer-to-peer lender Zopa passes £2 billion loans milestone". Business Insider. Retrieved 11 April 2018.
  14. ↑ Williams, Aime. "Zopa gets FCA approval as peer-to-peer lender". Financial Times . Retrieved 15 May 2017.
  15. ↑ Barber, Lynsey (11 May 2017). "Zopa just got full approval as a P2P lender from the FCA". City A.M. Retrieved 11 April 2018.
  16. ↑ Suter, Laura (26 May 2017). "Zopa Isa offering up to 6.1pc finally available". The Telegraph. ISSN   0307-1235 . Retrieved 11 April 2018.
  17. ↑ Editor, James Hurley, Enterprise (17 November 2016). "Peer-to-peer lender Zopa to launch bank". The Times . ISSN   0140-0460 . Retrieved 11 April 2018.{{cite news}}: |last= has generic name (help)CS1 maint: multiple names: authors list (link)
  18. ↑ Dunkley, Emma (16 November 2016). "Peer-to-peer lending pioneer seeks banking licence". Financial Times .
  19. ↑ "Digital Bank: Zopa Raises £44 Million to Help Fuel Expansion, "Launching Our Bank is a Key Next Step"". Crowdfund Insider. 3 August 2018. Retrieved 7 August 2018.
  20. ↑ "Zopa, the UK P2P lending company, secures bank license". TechCrunch . Retrieved 4 December 2018.
  21. ↑ Megaw, Nicholas (23 June 2020). "P2P lender Zopa wins UK banking licence". Financial Times . Retrieved 22 September 2020.
  22. ↑ Lanyon, Daniel (22 March 2021). "Zopa raises £20m to expand digital bank, eyes profits". AltFi. Retrieved 27 March 2021.
  23. ↑ Finn, Aisling (29 June 2021). "Zopa is setting its sights on a 2022 IPO". AltFi. Retrieved 7 July 2021.
  24. 1 2 Lunden, Ingrid (18 October 2021). "Zopa raises $300M at a $1B valuation to expand its P2P lending and savings neobank in the UK". TechCrunch. Retrieved 23 October 2021.
  25. 1 2 Lunden, Ingrid (2 February 2023). "Zopa, the UK neobank, raises $93M more at a $1B+ valuation". TechCrunch. Retrieved 4 February 2023.
  26. 1 2 "Zopa exits peer-to-peer lending". AltFi. 7 December 2021. Retrieved 7 December 2021.
  27. ↑ "Zopa acquires BNPL DivideBuy". AltFi. Retrieved 16 February 2023.
  28. ↑ Lewis, Martin. "Peer to peer lending: boost savings returns? - MSE". MoneySavingExpert.com. Retrieved 11 April 2018.
  29. ↑ "comparethemarket.com - Zopa loans". www.comparethemarket.com. Retrieved 11 April 2018.
  30. ↑ Beioley, Kate. "P2P platform Zopa re-opens to new customers". Financial Times.
  31. ↑ "Peer-to-peer lending explained - Which?". Which?. 21 June 2016. Retrieved 11 April 2018.
  32. ↑ "Zopa is 'pretty close to finishing' building its new bank". Business Insider . Retrieved 11 April 2018.
  33. ↑ "Zopa boss Janardana details plans for customer-centric bank - AltFi Opinion". AltFi. Retrieved 11 April 2018.
  34. ↑ Hurst, Samantha (4 August 2016). "Zopa Relocates: Moves Into New London Bridge Digs". Crowdfund Insider. Crowded Media Group.
  35. ↑ "Zopa Establishes Development Center in Barcelona". Crowdfund Insider. 7 June 2017. Retrieved 15 May 2018.
  36. ↑ Cave, Andrew (5 March 2016). "Zopa aims for enough growth to stop explaining its name". The Daily Telegraph . ISSN   0307-1235 . Retrieved 11 April 2018.
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