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Fintech Zopa set to launch first banking products

Zopa chief executive Jaidev Janardana. Photo: Zopa
Zopa chief executive Jaidev Janardana. Photo: Zopa

Fintech lender Zopa has been granted a full banking licence and plans to launch its first products later this year.

Zopa said on Wednesday it had been granted a full licence by the Financial Conduct Authority, which lifted restrictions it placed on Zopa when it first gained a provisional licence in 2018. The company was restricted to accepting just £50,000 from customers to test its fixed term savings product.

The lifting of restrictions means Zopa is now free to launch Zopa Bank to the wider public later this year. The company plans to launch a fixed term savings account and a credit card in the coming months.

“Now more than ever the banking industry needs innovative, agile providers who work on behalf of customers,” Jaidev Janardana, Zopa’s chief executive, said in a statement.

“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.”

Zopa is one of the UK’s oldest fintech businesses. The peer-to-peer lending business was founded in 2005. Its platform connects investors with consumer borrowers, offering more attractive rates than other mainstream investments. Over £1bn ($1.3bn) is lent on Zopa’s platform each year and has facilitated loans worth £5bn to date.

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Zopa has raised £200m from investors to date, including a £140m fundraise in December 2018 that was necessary for Zopa to secure its banking licence. The fundraising saw IAG Capital take a majority stake in Zopa and the change of ownership required approval from the regulator, which was granted in December 2019.

Zopa enters a competitive banking market in the UK, with well-funded digital-only rivals such as Monzo and Starling, more traditional challengers such as Metro Bank (MTRO.L) and Santander (SAN.MC), and the traditional “Big Four” lenders HSBC (HSBA.L), Barclays (BARC.L), Lloyds (LLOY.L), and RBS (RBS.L).

“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 to offer a wider range of great products, including savings and credit cards, alongside its personal loans and investments,” Janardana said.