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P2P Lending Meets High Street Banking as Metro Bank Partners to Lend Via Zopa

Zopa_homepage_May2015

Great Britain’s first P2P lender Zopa has teamed up with Metro Bank to combine P2P lending with “high street banking.” The first-of-its-kind deal makes Metro Bank the first bank in Great Britain to lend via a P2P platform.

Metro Bank will lend customer deposits through the platform. The bank has £3 billion in deposits and typically lends half that amount. Zopa currently provides £45 million in consumer loans a month, and has lent more than £850 million since inception.

A few metrics on Zopa:

  • More than £50m in interest earned by Zopa investors
  • More than 170,000 borrowers and more than 50,000 active lenders
  • Average loan size £7,500
  • Average historical return to lenders: 5%
  • Historical bad debt: 0.25% since 2010

The deal will make it possible for Zopa to expand significantly the loans it provides. Zopa co-founder and CEO Giles Andrews underscored the point in a statement, noting that the arrangement is a “clear sign that Zopa is a trusted platform not only for consumers, but also institutions to deploy their funds.”

Closer relationships between institutions and P2P platforms has drawn criticism from some who say that institutional participation will crowd out individual investors. Against this, Zopa notes that loans are allocated at random between institutions and individuals, and that both investors earn the same rates of interest based on loan length.

Founded in 2005 and headquartered in London, Zopa demoed its technology as part of FinovateStartup 2008.