Zopa is a British financial services company which offers deposit accounts and credit cards. It began as the world's first
peer-to-peer lending
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 ...
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.
It was founded in
Buckinghamshire
Buckinghamshire (), abbreviated Bucks, is a ceremonial county in South East England that borders Greater London to the south-east, Berkshire to the south, Oxfordshire to the west, Northamptonshire to the north, Bedfordshire to the north-ea ...
in 2004 by a team from the internet banking company
Egg Banking
Egg was an Online banking, internet bank headquartered in Derby, that is now a trading name of Yorkshire Building Society. Egg was born out of the banking arm in the United Kingdom of Prudential plc, which was established in 1996, and the Egg bra ...
.
Zopa grew steadily in the years prior to the
financial crisis of 2007–2008
Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of fi ...
. It navigated the period with no losses to investors' capital and only a small dip in returns during 2008.
In September 2016, the first portfolio of Zopa loans was securitised on the European markets.
In January 2017, Zopa became the first UK based peer-to-peer lending company to lend more than £2 billion worth of loans. Zopa became fully regulated by the
Financial Conduct Authority
The Financial Conduct Authority (FCA) is a financial regulation, financial regulatory body in the United Kingdom, but operates independently of the UK Government, and is financed by charging fees to members of the financial services industry. The ...
in May 2017. Following FCA authorisation, and
HMRC
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approval as an
Individual Savings Account
An individual savings account (ISA; ) is a class of retail investment arrangement available to residents of the United Kingdom. First introduced in 1999, the accounts have favourable tax status. Payments into the account are made from after-tax i ...
(ISA) manager, Zopa started offering Innovative Finance ISA products in June 2017.
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. In August 2018, Zopa obtained £44 million in funding for the launch of its new digital challenger bank. In December 2018 the company was awarded interim banking licences by the UK financial regulators, the
FCA and
PRA.
Retail banking services – including deposit accounts and a credit card – were launched in June 2020, soon after a full banking licence was awarded.
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.
In June 2021, CEO Jaidev Janardana stated that Zopa could be
taken public as early as the last quarter of 2022. In October of that year, the company raised $300million from
Softbank Vision Fund
The SoftBank Vision Fund is a venture capital fund founded in 2017 that is part of the SoftBank Group. With over $100 billion in capital, it is the world's largest technology-focused investment fund. In 2019, SoftBank Vision Fund 2 was founded. T ...
and other investors, implying a $1billion valuation.
On 7 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.
Products and services
Peer-to-peer lending
Zopa enabled investors to lend to UK consumers through its peer-to-peer lending platform. By 2021, around £6billion in loans had been processed.
Borrowers could take out loans between £1,000 and £25,000. Typically individuals used these to funds to help buy a car, consolidate debts, cover home improvements or weddings.
Investors could choose from four investment products based on their risk and return appetite. Investors' money was split across multiple borrowers. Investors then received monthly repayments of interest and capital, which they could re-lend to compound the interest.
On 7 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, credit cards, and a money management app which makes use of data made available by the introduction of
Open Banking
Open banking is a financial services term within financial technology. It refers to:
#The use of open APIs that enable third-party developers to build applications and services around the financial institution.
#Greater financial transparency ...
.
Corporate identity
The company's main office is at London Bridge.
Since 2017, Zopa also has a development centre in Barcelona, Spain.
The company's name comes from "
zone of possible agreement
The term zone of possible agreement (ZOPA), also known as ''zone of potential agreement'' or ''bargaining range'', describes the range of options available to two parties involved in sales and negotiation, where the respective minimum targets of ...
", a negotiating term identifying the bounds within which agreement can be reached between two parties.
See also
*
Comparison of crowd funding services
Crowdfunding is a process in which individuals or groups pool money and other resources to fund projects initiated by other people or organizations "without standard financial intermediaries." Mollick, E. (2014). ''The dynamics of crowdfunding: A ...
*
Peer-to-peer lending
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 ...
References
External links
*
{{Peer-to-peer lending companies
Peer-to-peer lending companies
British companies established in 2005
Banks based in the City of London