Zopa – Success Story of United Kingdom’s Newest Unicorn Financial Company
Zopa Ltd. is a British financial company that offers deposit accounts, credit cards, and personal loans. It began as the world’s first peer-to-peer lending company in 2005 and since then has gained a full banking license in 2020. The peer-to-peer side of its business closed in December 2021.
Zopa is a brand that very few people are familiar with and while it has lent £4 billion to over half a million people since its inception in 2005, it remains a little participant in the financial system.
Back in 2005, when Zopa debuted its goal was to be the “eBay for money” thus it established the first peer-to-peer lending network. The platform was then supposed to link borrowers and investors, providing borrowers with lower interest rates and fees than banks and investors a larger return on low-risk investing.
Zopa was also among the early adopters of the so-called sharing economy. It served as a marketplace between the client (the borrower) and the service provider prior to the development of Airbnb. However, as the sharing economy grew, P2P lending has struggled to have the same impact. Let us read more about Zopa, its history, and its future.
History of Zopa
Zopa was founded in the United Kingdom in March 2005 as a peer-to-peer lending arrangement, linking investors with persons needing loans. It was formed in 2004 in Buckinghamshire by a team from the internet banking firm Egg Banking. Zopa expanded exponentially in the coming years until the road bump which was the 2007-2008 financial crisis. It got through the time with minimal capital losses and just a little drop in return in 2008.
In January 2017, Zopa became the first peer-to-peer lending firm in the United Kingdom to lend more than £2 billion. In May 2017, The financial conduct authority completely regulated Zopa and it began delivering innovative Finance ISA products in June 2017 after receiving FCA and HMRC certification as an individual Savings Account (ISA) manager.
Zopa received £44 million in investments for the launch of its new digital challenger bank in August 2018 and in December 2018, the UK financial regulators, the FCA, and the PRA granted the business provisional banking licenses to Zopa.
Zopa introduced retail banking services, including deposit accounts and a credit card were introduced in June 2020 and by March 2021, Zopa had attracted around £250 million in fixed-term savings accounts and had established itself as a “top 10 credit card provider”.
Zopa’s CEO is Jaidev Janardana and in June 2021, he suggested that Zopa might go public as early as the fourth quarter of 2022. It secured $ 300 million from Siftbank Vision Fund and other investors in October of that year.
On December 07, 2021, Zopa stated that it will be closing down its peer-to-peer business, including the acquisition of existing investor loans. Over 15 rounds, Zopa has raised a total of $792.3 M in funding and Zopa is invested by 24 investors in total. Zopa is now valued at $1 billion, making it the latest European fintech to achieve “Unicorn” status. The company aims to go public by late 2022 and
Growth Story of Zopa
Zopa bank has been profitable since it obtained a UK banking license in June 2020. Zopa stopped its peer-to-peer lending business in December 2021 in order to concentrate on its digital bank product. Since its start in 2020, Zopa bank has been able to collect £1 billion in deposits, loan more than £1 billion, and issue more than 250,000 credit cards.
Zopa by many is considered to be the quickest bank in history to achieve profitability, reinforcing our beliefs in the necessity of sustainable growth as a driver for faster product and market expansion. Zopa has built a successful digital bank with the help of significant technological investments as well as substantial marketing. Zopa banks have benefited from the expertise of the Zopa peer-to-peer lending company, which was one of the first of its type when it launched in 2005. After reaching a $billion value, the business becomes a fintech unicorn in 2021.
Factors Behind Zopa’s Success
In the last 9 months, Zopa banks have grown to become a top ten credit card provider in the UK, recruiting over 100,000 credit card members. Zopa has also been in increasing demand for its personal loans and vehicle lending products. Along with loans, Zopa has also received over £400 million in consumer deposits and has won multiple accolades for its innovative savings product.
One of the key factors in Zopa’s success has been its innovative approach to P2P lending. The company’s platform has made it easy for borrowers and lenders to connect with each other and transact, streamlining the lending process and providing a high-quality customer experience. Zopa’a commitment to customer satisfaction has also been a significant factor in its success, attracting a large and growing customer base and establishing the company as a provider of high-quality financial services.
Zopa’s founders Giles Andrews and Jaidev Janardana, have made a significant contribution to the success of the company. Their vision and entrepreneurial spirit, combined with their experience in the financial industry, have been key factors in building and growing Zopa into the successful business it is today.