How Zopa Operates Nationwide Through Just Six Credit Union Partners

One of the first questions that arose when Zopa began facilitating loans and deposits for six U.S. credit unions earlier this week was, "What about (CU) field of membership requirements?" (see coverage here). It turns out that four of the six credit unions working with Zopa offer membership to anyone in the United States as long as the prospective member joins one of the supported organizations. And Zopa handles that hurdle during the signup process for its marketplace.

For example, when I purchased a Zopa CD earlier this week, I was given the choice of joining either First Tech Credit Union, which offers membership to anyone in my state (Washington) or Addison Avenue Credit Union, which anyone can join provided they pay $5/yr to join the Financial Fitness Association. And to make the process simpler, Zopa covers the first year of association dues (see screenshot below).

Bank Deals blog dug out the membership requirements of the six Zopa partner credit unions (here). Here are the four that offer membership through one or more organizations: 

First Look: Zopa Opens in the United States with Depository Model

Zopa US opened a private beta Saturday morning, emailing selected customers that had previously signed onto its mailing list. Both of our listed email addresses received invites.

We'll look closer at the new service in our upcoming Online Banking Report on P2P lending, but what stands out is the business model: part P2P lender, part deposit-taking financial institutions, part charitable organization, part broker, and part lead-generation site. I'm not positive you can be all of those things at once, but it will be fascinating to see if Zopa and its partner credit unions can pull it off.

How it works
To understand how the Zopa US system works, you must first realize that all loans and all deposits are held at the six partner credit unions (see list below). So in that way, Zopa is a pure lead-generation play.

Zopa "investors" put their money in fixed-rate, 1-year certificates of deposits held by a credit union partner. Borrowers take out 5-year fixed-rate personal loans, again from a credit union partner. This part is pure depository financial institution, with Zopa as a broker. 

Finally, the P2P/social finance aspect comes into play with the requirement that all depositors must choose to "help" at least one borrower by reducing the borrower's loan payment. The depositor has the choice of accepting the highest rate of interest, currently 5.1%, and making a token donation, or sharply reducing the APY on the Zopa CD in order to provide more financial assistance to Zopa borrowers. Depositors select who they want to help from the listed loans. An obvious scenario would be a grandparent investing a substantial sum into low-interest Zopa CDs, so that a child/grandchild could take out a 5-year loan to help with a down payment on a house. But depositors may also help a stranger whose story they find appealing. 

Our preliminary take
Zopa has removed much of the uncertainty from the P2P lending process. But by eliminating the risk, they've also reduced available returns. Marketing Director Wade Lagrone, with whom I spoke Saturday afternoon (as Zopa engineers hammered away on the final tests), believes that U.S. investors overwhelmingly prefer low-risk, fixed-income investments and will prefer this P2P model.

I'm not convinced yet. It seems like a somewhat convoluted path to buy a simple CD. First, you must set your deposit rate, choose one or more borrowers to help, and finally join one of the six credit unions. The website makes the process relatively straightforward, but it's not the same as simply dropping a few grand into an online bank. 

On the other hand, the ability to donate all or part of your deposit's interest-yield could appeal to certain investors, especially the well-heeled looking to help family members obtain below-market-rate loans for defined purposes (home purchase, education, business expansion, etc). And eliminating lender risk removes the huge chore of keeping lenders happy and informed about their book of loans. 

Another potential problem is lack of transparency for borrowers. To obtain a Zopa loan, prospective borrowers fill out a nonbinding "loan quote." Not until after this application is made, and a credit inquiry logged, do borrowers find out if they will receive the lowest rate of 8.75% or the highest of 16.99%. And borrowers have no idea whether they will receive "help" from investors to lower their payment, and effectively reduce the APR of the loan.

Screenshot: Zopa CD setup (1 Dec 2007)
Zopa investors (aka lenders) select the rate of return for their 1-year CD and then choose a borrower to help by offsetting a portion of their Zopa loan payment.

Appendix: Credit Union Partners
The six U.S. credit union partners of Zopa US:

  • Addison Avenue Federal Credit Union
  • Affinity Plus Federal Credit Union
  • FirstTech Credit Union
  • FORUM Credit Union
  • Provident Credit Union
  • USA Federal Credit Union

Blog Sighting: Carolina Postal Credit Union’s Irreverent "I Love My Hoopty"

Finally, we have someone using a blog to have a little fun (note 1). Carolina Postal Credit Union's blog, I Love My Hoopty, is using humor and user-generated content to drum up car loan business. Through its website and blog, the CU asks users to write about and post pictures of their first cars, and the more rickety the better. I wasn't familiar with the term, but apparently in this context "hoopty" means an old rickety car. 

The hoopty theme is also used on the CU's homepage to promote vehicle loans (see second screenshot below). 

Since I'm twice the age of the target market here, it doesn't matter that the blog's content doesn't resonate with me. I LOVE the creativity and I'll bet the younger, Colbert-Report-watching crowd thinks it's pretty cool that a bank/credit union would do something this irreverent. 

Unfortunately, the follow-through doesn't look nearly as good as the creative. I first noticed this blog a few months ago, and until last week, it hadn't been updated since July. It doesn't really make sense to have a blog that's only updated a few times per year. If the CU doesn't have the resources to add something at least once per month, it should pull the blog down and incorporate the content into its main website.

Also, I question the prominence of the campaign on the CPCU homepage. Is that really the main message you want displayed to your members for several months? Even if does fit the overall brand strategy, the CU should change the banner ad's hyperlink. Currently, it goes to the hoopty blog (after a short detour to acknowledge that they are leaving the CU's website), which is not an effective landing page. The CU should first take users to a dedicated lending page that explains loan options and prices and invites members to apply.

Carolina Postal Credit Union blog (20 Nov 2007

I love my hoopty blog

CPCU homepage
(20 Nov 2007


1. UMB used a similar approach in its My Ugly Room contest a year ago. 

High-Rate Savings for Kids, Patelco’s "gr8 r8"

Earning interest is a great incentive for kids to save. Even a couple bucks in "free" money earned on their deposit is a great motivator. But with many savings rates below 1% annually, it doesn't add up fast enough for lower balance levels. At US Bank's 0.10% rate, my son's $1,700 in savings would only earn him $1.70 per year, or 14 cents a month. There is no incentive there.

But at Patelco Credit Union, with its kid-friendly "gr8 r8" account (see note 1, 2), he would earn 8% on the first $1,000 and the going rate on the rest (1.51%). And the 8% is guaranteed through the end of 2008. So his annual return increases to $81, or almost $7 per month, 50x the US Bank return. Seven bucks extra a month is real money to a pre-teen, and gives him a good taste for the benefits of saving and investing for the long-term. Even more important, it positions the CU as family friendly, impressing the parents and maybe hooking the kids as future members as well.

Granted, the business case is tricky. Does subsidizing junior to the tune of $5/mo really benefit the credit union and its members. If the CU had 20,000 of these accounts, that's an extra $1.2 million per year in interest expense. Might the credit union's other 220,000 members prefer an extra $5 in their accounts at the end of the year? I'm guessing most members would support efforts to instill savings discipline in today's youths. And the marketing and PR benefits are excellent. The CU even features the account on its homepage (see screenshot below).

So, overall I r8 it gr8. Thanks Trey (see note 2).  

Patelco CU homepage (19 Oct. 2007)


1. Must be under 21 when account opened. No maximum account balance, but only the first $1,000 earns 8%. The special rate is good through the end of 2008, when the account reverts to a regular savings account.

2. I just realized the account name, gr8 r8, is a double entendre, not only being SMS-speak for "great rate," but also with an eight-percent rate. [My family has to spell these things out for me.]  

3. Thanks to Trabian's Trey Reeme for the tip (here). And I agree with him, gr8 r8 savings absolutely must have an SMS component, at minimum a message each month when the "free money" (interest) is added to the account.

Green (Hybrid) Auto Loans from Star One Credit Union

In many ways, hybrid vehicles are the perfect antidote for guilt about our 21st century high-consumption lifestyle. Buy a Prius, and instantly feel better coasting around the city on self-generated battery power. Yet you still get to motor about in a relatively large, well-appointed and air-conditioned steel box (note 1).  

That's why politicians have jumped on this bandwagon in droves. And why it makes a great marketing statement to support energy-saving and/or low-emission alternatives with loan discounts. Not only does it position you as caring about the larger environment, there is a very real environmental education benefit to the efforts.

The most recent exampleStar One Credit Union <>, a $3 billion (assets), 71,000 member CU based in Sunnyvale, Californiahas a link on its homepage to its hybrid offer. Customers financing a new or used hybrid vehicle save 0.25% on their loan rate. On a $20,000 5-year loan, $139 is saved, enough to fill the tank three, maybe four times. The offer is spelled out here (screenshot below).  

Other financial institutions offering hybrid car loans:

  • UCB Bank (Miami, FL): no payments for 3 months offer here
  • Deedham Savings (Deedham, MA): offer here
  • Sound Credit Union (Tacoma, WA): 0.50% discount offer here
  • Tech CU (San Jose, CA): 0.25% discount offer here
  • Vancity (Vancouver, BC, Canada): Prime rate for low-emission vehicles here


(1) I'm not trying to be cynical here. As a former engineer, I think hybrid technology is fantastic. Using waste energy to fuel the car is both elegant and efficient, and I look forward to driving one soon.

Amplify FCU’s MoneyTracker Features Personal RSS Feeds

When researching new mobile banking launches (see our earlier post here), we ran across one of the more innovative financial institutions in the country: Austin, TX-based Amplify Federal Credit Union <>, a $400 million asset institution with 40,000 members. The CU's tagline, Bank less. Live more. is right on target for the majority of financial consumers. 

It's possible that Amplify uses more of the ideas we've featured in Online Banking Report and NetBanker than any financial institution we've come across. For example, cafe branches with free WiFi, mobile banking (WAP), Web 2.0 look and feel, high-yield checking (up to 5.1% APY), online chat, fee-based ($5.95/mo) value-add checking account (Amplified checking) loaded with online and mainstream features, and a host of other services from college planning to eBay bidding (see menu here). One surprising omission: no blog.  

OBR Best of the Web
Link to Online Banking Report But our favorite feature, and winner of our fourth OBR Best of the Web 2007,* is Amplify's new personal finance management program, MoneyTracker. MoneyTracker uses natural language search so members used to Googling there way through the day will feel right at home. Instead of using slower drop-down search, a customer wanting to review recent Costco purchases simply enters "costco this year" in the search box.

The program was developed by Austin startup, Jwaala, which announced it in November. Amplify, which went live March 5 (press release here), is Jwaala's first installation.

MoneyTracker also includes an account aggregation engine so accounts at any financial institution can be tracked. And like eBay, it allows users to turn any search into an automatic alert with the option of receiving the information via email, SMS, or an RSS feed (see inset). As far as we know, Amplify is the first financial institution in the U.S., if not the world, to institute personal RSS feeds for its customers, and it is the basis for the Best of the Web designation.

Amplify posted a series of six videos (here) that do a great job explaining Money Tracker, an important part of gaining trial. The style, copywriting, on-screen talent, and staging, are among the best we've seen online.  

Amplify's Main MoneyTracker page (link here):

Amplify FCU landing page for Jwaala's MoneyTracker    


*OBR Best of the Web awards are given out occasionally for features that raise the bar in online financial services. It is NOT necessarily and endorsement of the company or its full product.

New CU Blogs: Midwest Financial, Old Hickory, and Secure One Credit Unions

In our blogging report published last fall (here), we predicted there would be 300 U.S. financial institution blogs by the end of this year. Five months into the year, we are way behind on that projection, with about two dozen financial institutions blogging. That includes just two banks (Wells Fargo and Bank of Internet) and 20+ credit unions (see previous coverage here).

We found three new credit union blogs this weekend, another 1% of the way towards that prediction, which looks high. But I still think there will be close to 200 by year-end. And I promise not to profile ALL of them here.

My Credit Union Blog

MidWest Financial Credit Union and its affiliate, University of Michigan Health System Financial, launched a joint blog on May 14. Although, these two financial institutions are part of the same company, joint blogging efforts across several credit unions in the same geographic area could make a lot of sense.

My Credit Union Blog is attractively laid out and has five postings in its first week, several that are fairly long and fall into the "consumer education" category. It's fine to sprinkle those in over time, but don't overwhelm your readers with long lists of tips and tools. They can already read that stuff at just about any financial website.

Your blog should primarily have short, interesting articles of local interest. Limit the educational pieces to one or two per month at most. Again, Piedmont CU is the best FI blog I've seen in terms of content (see previous post here).

My Credit Union Blog from MidWest Financial CU and UMHS Financial

Old Hickory Credit Union

Old Hickory Credit Union's blog began last week with the obligatory welcome message and the first entry on going green with electronic statements, always a good blog subject. With just one entry, it's too early to comment on the content. But the layout is clean, it wisely uses it's own URL <>, unique template, and covers the basics in the About section introducing the two bloggers behind the effort. Hopefully, over time the blog will be spruced up with more graphics and pictures.

Old Hickory CU blog

Secure One Credit Union

Unlike the other two new blogs, Secure One Credit Union, should consider pulling its blog down until it has more resources to commit to the project. The blogger platform makes it look cheap (which it is), but the fatal flaw is lack of content. There are only two entries since its March 20 launch, and the last, which is more than a month old, simply lists CD rates, something that can easily be found on a regular website. Here's the link: <>.

You don't have to blog that often, but once or twice per week is a good rule of thumb, and at least some of the posts should be original content, not cut-and-paste jobs from your website.

Secure One CU blog

Here’s a Financial Institution Blogger that Does it Right


Link to Piedmont CU homepage One of the biggest questions surrounding financial institution blogging, is whether anyone would actually want to read one. We are firmly in the camp that EVERY bank, credit union, and financial services company should have a blog (see our Online Banking Report on blogging here). But with so few actually doing it, it's hard to find examples that provide a good mix of community news, financial advice, along with that right "tone" that makes it readable and believable. 

Here's one to watch. After just two months bloggin, Dan Veasey, Director of Marketing and Biz Dev at Piedmont Credit Union in Danville, VA, looks like he has what it takes. When I first looked at his blog (here), there were only a few entries, and its credibility was hampered by the limitations of the Blogger template. Well, Dan took the advice of several industry observers and moved it to a WordPress template several weeks ago.  

With the conversion behind him, Dan has been concentrating on the content, which is really what it's all about. For example, in the past week Dan had a great content mix with local news (Starbucks opening), humor (sponsoring a digit of the number pi), CU business (annual meeting invitation), and serious financial subjects (budgeting for a family). He uses a friendly tone that establishes his credit union as the kind of place you want to like. And he drops in a picture or two to break up the text. 

Now, all this takes time, so he may need to bring in another author to keep up the pace; but so far, it's great work and a good example to follow.  

Here are the previous five posts: 

Piedmont CU blog posting

New Blog: Comala Connection from Comala Credit Union

Comala Credit Union: <>



In our view, any blog is better than no blog; however, Comala Credit Union's new blog puts that hypothesis to a test. It's only been online for two weeks, so we'll cut them some slack, but they need to spruce it up a bit if they want members to trust it as a reliable resource.

Thanks to Ron Shevlin for posting the first link to the blog (here).
Update: Apparently, Morriss at Everthing CU had it first. Both posts were on the same day, but I doubt Ron posted his before the 12:19 AM entry at EverythingCU (here).


First post: 12 April 2007

Number of posts in April (April 1 to 25): 3

Comments in April: 3

Comments related to blog content or CU: 1

Traffic: not available

Score: 7 out of 18 (Grade = C-)

  • CU branding: No (just a small picture of what must be headquarters)
  • About this blog area: No
  • Relevant content: Not enough info (just 3 posts)
  • Appropriate post frequency: Not enough info 
  • Acceptable blog "tone": Yes
  • Prominent link to main CU website: No (buried in link list on lower right)
  • Email address for author or CU: No
  • Author name: No
  • Author bio: No 
  • Posts dated: Yes
  • Categories: Yes
  • Blog search: Yes
  • Professional look and feel: No (standard free Blogger template)
  • Comments: Yes 
  • CU response to comments: Yes
  • RSS signup: No (small Atom link at very bottom does allow feed signup; but it is difficult to find)
  • Email signup: No
  • Links to other appropriate resources: No
  • Prominent mention on main CU homepage: Yes (big time…and it blinks!)
  • Supplements text with occasional pictures/graphics: No

For more info on financial blogging: