Zopa has today been awarded its full bank licence, launching at a time when consumers need financial services providers to work on their behalf more than ever.
Zopa Bank will focus on better meeting the financial needs of UK customers in sectors where they have traditionally been poorly served, while also delivering an experience that matches their expectations of a digital-first company. The new bank will be launching a new set of products, starting with a fixed term savings account. The Zopa Fixed Term Savings Account offers a competitive rate over 1-5 years at a time when rates are at a historic low. The account can be opened in as little as 7 minutes online and is protected by the Financial Services Compensation Scheme (FSCS) up to £85,000.
Building on its 15 year lending heritage in peer to peer, Zopa will also be introducing a credit card in the coming months which will include innovative new features designed to put customers in control of their borrowing. The card will address the needs of customers who have had to put up with poor service and unclear pricing from their existing card providers. These new products will sit alongside Zopa’s existing offering of personal and auto loans and investment products.
Zopa’s entry to the banking market comes at a pivotal time for UK consumers. While customer behaviour towards and expectations of banks has been shifting over the last decade, the current crisis has put increased focus on whether the traditional players are best equipped to help people manage their finances. Independent research commissioned by Zopa found that a fifth of UK adults (20%) said they had faced struggles contacting their bank during the coronavirus pandemic and a third (30%) said they wanted additional flexibility and better guidance from their main bank to help them during these uncertain times.
In stark contrast, Zopa offers an agile approach and has been able to innovate quickly through the crisis in order to better help its 300,000 existing customers – who have investments or loans with the company. At the onset of the coronavirus pandemic in the UK, Zopa adapted its technology at speed, introducing online assistance such as; dedicated help forms, an income and expenditure tool and a specific COVID-chatbot, all of which helped worried or affected borrowers to access information and help quickly, without the long waiting times experienced by many high street bank customers. The bank has also worked closely with leading debt charity, StepChange, integrating the charity’s 60 second debt checker and benefit calculator into its app, to offer further help to its customers. For investors, Zopa has been able to continue lending their money by rapidly iterating its lending criteria as the market changed.
Such interventions have meant that during the height of coronavirus (1March – 12 June 2020), 96% of Zopa’s Trustpilot reviews were either 4 or 5 star.
Jaidev Janardana, Zopa CEO, commented: “Now more than ever the banking industry needs innovative, agile providers who work on behalf of customers. At a time when people want great value, fair financial services products and simple, intuitive digital experience, Zopa offers consumers a compelling and credible alternative they can trust. Securing our banking licence enables Zopa to play a wider role in the financial lives of our customers, as well as offering much needed choice and competition to the wider market. Beyond the current pandemic, Zopa is uniquely placed to provide a compelling alternative to traditional banking by leveraging its significant technological and financial services expertise tooffera wider range of great products, including savings and credit cards, alongside its personal loans and investments.”
Zopa Bank will sit alongside its existing peer to peer business (Zopa Limited), as part of the overall Zopa Group.
Zopa has raised £140m, its largest funding round to date, enabling its banking entity to fulfil its regulatory capital requirements. The investmenthas been provided by IAGSilverstripe Partners,an investment arm of IAG Capital, the private investment group specialising indigital andtechnology - ledbusinesses. IAG Silverstripe first invested in Zopa in October 2018.
Since pioneering the peer-to-peer lending industry globally in 2005, Zopa has helped half a million people enjoy better value personal loans or to grow their money through investments, created a new asset class, and redefined the experience people have come to expect from their financial provider.
Last year Zopa launched ‘Borrowing Power’ within its app, a unique tool which personalises actions to help customers improve their credit score enabling them to borrow at a lower rate.It also launched a market first direct to consumer car finance product in a sector ripe for transformation.
*Opinium Research. Total sample size 2,003 UK adults. Fieldwork was undertaken between 22 – 24 May 2020