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Zopa expects its banking arm to make a profit in its first year of operation after high demand for banking services that are designed to be as easy to use as Netflix.
In its first 12 months, Zopa Bank has concentrated on the savings market, offering an account that can be set up in seven minutes.
As well as expecting to be profitable this year, Zopa Bank has become a top 10 credit card issuer in the UK, gaining more than 100,000 credit card customers in nine months. It has also attracted more than £400m in customer deposits.
Best known as a peer-to-peer lender, Zopa was launched in 2005 and has since built up a large customer base. It initially gained a UK banking licence with restrictions in December 2018. It achieved a full licence in June 2020, launching soon after.
Speaking to Computer Weekly last year, Didier Baclin, then chief product officer at Zopa, said the company was applying its tech know-how and machine learning to provide consumers with banking services that are as easy to use as Netflix and Amazon.
All banking services are available on the Zopa app, which was launched in 2018. It initially enabled borrowers to track loans, but Zopa decided the app would host all products and services going forward.
“We built a bank to better meet the needs of UK consumers and our year one success endorses that approach,” said Zopa CEO Jaidev Janardana. “We look forward to using the momentum that we have gained to expand our products and services further and to help more customers.”
Jaidev Janardana, Zopa
If Zopa does make a profit in its first year, it will be remarkably fast for a new bank. Starling Bank, which was the first UK challenger bank to make a profit, did so in late 2020, four years after achieving its full UK banking licence.
For Zopa, however, having a large part of its technology operation and infrastructure already in place negated much of the initial cost associated with setting up a digital bank.
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, around 100 of whom work directly with technology, such as software developers and data scientists. Around one-third of its employees work at least partly with technology. In 2018, in preparation for the new bank, Zopa invested in building a team of developers, based in London and Barcelona.
Partly fuelled by the initial success of its bank, Zopa is planning an initial public offering (IPO) next year. “Our trajectory puts us on course to be amongst the fastest digital banks to achieve profitability,” said Janardana. “We will continue to build from that base, with an IPO on the horizon as early as the fourth quarter of 2022.”
Read more about Zopa
- Peer-to-peer lending platform Zopa has received a UK banking licence and will launch a digital bank to run alongside its current business.
- Zopa has made a credit scoring tool available as it continues to expand the portfolio of products it offers beyond loans.
- Peer-to-peer lender tests out banking platforms in anticipation of launching products in the UK before the end of this year.