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Zopa continues in its mission to apply a Netflix user experience to banking

Zopa has made a credit scoring tool available as it continues to expand the portfolio of products it offers beyond loans.

Peer-to-peer lending company Zopa has launched a credit scoring tool on its app, as it expands its offering to challenge the UK’s retail banks.

Zopa, established in 2005, is applying its tech knowhow and machine learning to give consumers services that are as easy to use as Netflix and Amazon.

The latest tool, known as Borrowing Power, lets customers quickly find out their credit scores and get advice on how to improve them. The tool uses data from Equifax and, through machine learning, gives insights to customers about why their scores are where they are and how to improve them.

This is part of the company’s journey to become a bank, with a savings account and credit card currently being tested with staff internally. They will soon be launched to a limited set of customers for beta testing.

Everything will be on the Zopa app, which was launched last year. It initially enabled borrowers to track loans, but will host all Zopa’s products and services going forward. Zopa’s products are in the Amazon Web Services cloud.

The Borrowing Power tool gives customers a simple score between one and 10, and also links them to the Zopa loans available to them. The tool will also be applied to other Zopa products, such as credit cards, when they become available.

“As you start to understand your Zopa Borrowing Power, you can see the products you can unlock,” said Didier Baclin, chief innovation officer at Zopa. He added that customers can get more in the future, including lower borrowing rates, as they improve their credit scores.

Significant savings

Baclin said the savings can be significant, with Zopa’s own internal research finding that an improvement of the Borrowing Power credit score is resulting in savings as much as £600 on average for a three-year loan.

“Over time, we want to help people connect their open banking data to give them more insights and tips to help them improve their scores,” he said.

Read more about Zopa

Historically, it has been difficult for people to understand their credit scores. “Most people know what credit scores are, but half don’t know their credit scores or how it changes their ability to borrow.

“Behind the scenes, we use machine learning technology to help us understand which actions are most impactful for customers,” said Baclin. “We want to give tailored tips to customers.”

He said the machine learning methods being used are similar to those pioneered by the likes of Netflix and Amazon, to advise users of the habits of other customers. For example, they tell customers “people that bought this also bought this” and “people that watched this also watched this”.

This method will be applied to guiding users on financial products. “With things like Netflix, a lot of very complex things are going on in the background, but to the customer it looks very simple,” said Baclin. “That is exactly what we are trying to do.”

All the technology has been built in-house by Zopa, which enables it to change things “quite rapidly based on user feedback”. The Borrowing Power tool was built in under five months.

Kotlin is the programming language used at the back end with the React Native open source mobile application framework, from Facebook, used to build mobile applications at the front end.

Zopa decided to build the tech platforms for its banking products in-house because of its extensive internal tech talent with experience in building a peer-to-peer lending platform. It has about 500 staff, with around 100 working directly with technology, such as software developers and data scientists. About one-third of its employees work at least partly with technology.

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