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While rumors have been circulating for days, Zopaconfirmed today that it has raised $182 million (£140 million) in its largest fundraising to date. The capital comes from IAG Silverstripe, the investment division of IAG Capital, and will, in the words of Zopa CEO Jaidev Janardana, enable the P2P lending pioneer to fulfill the regulatory capital requirements and lift restrictions on its banking license.
“This new funding means we have concluded the fundraising phase of our bank mobilization,” Janardana said. “Definitive agreements to provide the funding have been finalized and are subject to final approvals including regulatory change of control.”
IAG Silverstripe has been an investor in Zopa since the fall of 2018, and holds a minority stake in the company. Zopa noted that its bank will operate along with its current P2P financing business (Zopa Limited) as part of the larger Zopa Group.
The funding for Zopa arrives at an opportune time for the company, which will celebrate its 15th anniversary next year. Granted an “Authorisation with Restriction” by U.K’s Financial Conduct Authority on December 4, 2018, Zopa had twelve months to meet the capital requirements that would enable the company to go ahead with a full launch. Even as the deadline drew near last week, Zopa representatives expressed confidence in the company’s ability to raise the necessary capital.
“We continue to hold our bank license with restrictions and are working closely with the regulators to gain our full license,” Janardana explained. “We are excited that, once approved, Zopa will be able to launch its bank alongside its peer-to-peer business and offer a broader set of products to our customers.”
One of Finovate’s earliest alums, the company demonstrated its P2P lending platform at FinovateSpring 2008, billing itself as the “world’s first social finance company,” In the years since its founding in 2005, Zopa has lent 5 billion pounds in unsecured personal loans to customers in the U.K. Headquartered in both New York and London, the company launched a new savings solution last month that offers a fixed-term account with 4% interest as part of its entry into the world of banking. In October, Zopa introducedBorrowing Power, a new offering that uses AI to help customers see what determines their personal borrowing power.
P2P lending company and newly initiated challenger bank Zopa is taking a first step on its banking journey with the rollout of a new savings product. The U.K.-based company is launching fixed-term savings accounts that will be available for terms of one month and pay 4% interest.
This news comes after the company received partial authorization from the Financial Conduct Authority (FCA) last December and launched bank products with its staff as beta testers. This partial authorization is the reason behind the limited nature of the savings accounts. Zopa is currently operating in a period called AWR (authorization with restrictions), meaning the company has met all of the FCA’s conditions and is allowed to begin testing bank products.
Under those restrictions, Zopa cannot accept more than $64,000 (£50,000) in customer deposits, so it is only inviting 200 current investors to test out the new savings product. There is no word yet on when the restrictions will be lifted.
“Inviting existing customers to test our Fixed Term Saver is a major milestone in our bank journey,” said Zopa CPO Didier Baclin. “It is a great opportunity to ensure that the product meets their expectations before the full launch next year so that we deliver a great product that customers can trust.”
Zopa’s choice to start its bank product offerings with a high-interest savings account doesn’t come as a surprise. As we covered last month, multiple fintechs are offering high interest bearing accounts in order to attract customer deposits away from their primary, traditional bank.
Last year, Zopa closed a $77 million (£60 million) investment round that contributed to the company’s total of $297 million in funding it’s received since launching in 2005. Zopa is seeking to raise additional funding this year, stating that the fresh capital will offer the boost it needs to have the FCA’s restrictions removed.
Zopa’s former CEO Doug Dolton debuted the P2P lending platform at FinovateSpring 2008 at Finovate’s very first show in the Bay Area. The company was founded in 2005, pioneering peer-to-peer lending in the U.K., and has since amassed 400,000 customers and facilitated $5 billion (£4 billion) on its platform.
P2P lending company and challenger bank Zopaannounced something consumers can feel good about this week. The U.K.-based company, which brands itself as the FeelGood Money company, launched a tool to help borrowers find the best rate for their loan.
The new tool, Borrowing Power, leverages AI to show users what makes up their personal borrowing power and guide them toward actions to help improve it. Each score is linked to a Zopa loan and shows the user their eligibility and rate. Borrowing Power also shows users what-if scenarios– that is, how their rate may increase if they take certain actions to improve their score. Ultimately, the tool has the potential to positively impact consumers’ financial behavior.
“Customers deserve to know their eligibility for credit, current credit scoring is merely scratching the surface,” said Zopa CPO Didier Baclin. “We have effectively broken open the black box to understand what is going on and, combining this data with additional information about the customer, are able to give bespoke actionable insights to our customers that could enable them to improve their credit risk in a short time frame and then ultimately be able to borrow from Zopa at a better rate.”
The Borrowing Power score, which ranges from one to 10, is simpler than a credit score. The score is comprised of only five elements:
Combination of credit rating data
Affordability based on personal circumstances
Zopa leverages this data to inform consumers if they can improve an aspect of their credit profile, and in what time period. The company makes it easy for borrowers to understand the loan by showing them the actual interest rate. And, making the score as consumer-friendly as possible, Zopa only uses a soft credit inquiry so that it doesn’t impact their credit score until the loan is official.
Zopa was founded in 2005, pioneering peer-to-peer lending in the U.K., and has since amassed more than 400,000 customers and facilitated $5+ billion (£4+ billion) on its platform.
Last December Zopa made fintech headlines by launching its new bank in beta. The company is currently operating the bank in a period called AWR (authorization with restrictions), meaning it has met all of the FCA’s conditions and is allowed to begin testing the new banking products.
Zopa’s former CEO Doug Dolton debuted the P2P lending platform at FinovateSpring 2008 at Finovate’s very first show in the Bay Area.
Just over two years ago, P2P lending company Zopaannounced its plans to launch a challenger bank. Today, the U.K.-based company announced it received authorization from the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA).
Zopa is currently operating in a period called AWR (authorization with restrictions), meaning it has met all of the FCA’s conditions and is allowed to begin testing the new banking products. The company will use its own staff to serve as the beta testers for the new banking products.
There is no word yet on when the restricted period will be lifted to allow Zopa to fully launch, but when it does, it will offer savings accounts and credit cards that can be managed within a new mobile app. The app will offer money management tools that help place customers in control of their finances by showing all of their accounts in a single place.
To position itself as more user friendly than traditional banks, the company is branding itself as the Feelgood Money company. Backing this ideal, Zopa is avoiding hidden fees and promising to have “helpful humans” on the other end of customer service calls.
“This is a huge milestone for Zopa as we are now the world’s first combined peer-to-peer lender and digital bank,” said Zopa CEO Jaidev Janardana. “It also brings us one step closer to being the best place for money in the U.K. by offering a broader selection of personal finance products.” Janardana discusses what’s next for Zopa in the video below:
Zopa was founded in 2005, pioneering peer-to-peer lending in the U.K., and has since amassed 400,000 customers and facilitated $5 billion (£4 billion) on its platform. The company plans to continue to grow its peer-to-peer platform, which will run alongside Zopa’s bank offerings.
Zopa’s former CEO Doug Dolton debuted the P2P lending platform at FinovateSpring 2008 at Finovate’s very first show in the Bay Area. Last month, the company added $20.7 million to its Series G funding round, bringing its total funding to more than $77 million. Earlier this fall, Zopa earned recognition on the Inc. 5,000, ranking 1,314.
U.K.-based P2P lender Zopa added another $20.7 million (£16 million) to its latest Series G investment round this week. The company has built upon its $57 million (£ 44 million) August fundraising and now has more than $77 million (£60 million) in new capital to pursue its current objective: building a bank.
“This new funding takes us a step closer to realising our vision of being the best place for money in the U.K.,” Zopa CEO Jaidev Janardana said. “Having served half a million customers to date, Zopa is set to redefine the finance industry once again through our next generation bank to meet a broader set of U.K. customers’ financial needs.”
Participating in the Series G were Bessemer Venture Partners, Northzone, Augmentum Capital, and Wadhawan Global Capital. Zopa’s total funding is $190.2 million (£152.9 million).
The round was the largest yet for the innovative peer-to-peer lender, which applied for a banking license in 2016. The company noted at the time that the application process can take between 15 months and two years – making this week’s investment and the company’s return to profitability for the first time since 2012 timely news for Zopa.
“2017 was a landmark for us,” Janardana said in a statement this summer, reporting the company’s good financial fortunes. In addition to revenue gains of 40% and a 43% increase in funds loaned, Zopa earned full FCA authorization last year – the first major P2P lender to do so. This enabled the company to launch its Innovative Finance ISA, bringing the tax efficiency of ISAs to P2P investments.
Zopa’s digital bank, which the company says it expects to launch “soon,” will initially offer FSCS-backed savings accounts and P2P investments such as ISAs, as well as credit cards, personal loans, and auto financing. Janardana told the Independent in October that he hoped to reduce the stress for people trying to manage their finances and “extend the ethos of peer-to-peer into retail banking.”
One of Finovate’s earliest alums, Zopa demonstrated its technology at FinovateSpring 2008. Janardana, along with the company’s board chairwoman, Christine Farnish, was named to the Peer2Peer Finance News Power 50’s Top 10 earlier this month. Zopa has lent more than £3.78 billion to customers in the U.K., with more than 60,000 active individual investors and more than 311,000 borrowers approved via the company’s platform.