Digital bank Zopa has raised £75 million ($95m) in Tier 2 capital in order “to further accelerate its growth, supporting its vision to become Britain’s best bank.”
The funding will ” fuel Zopa’s continuous growth and expansion.” It brings the total capital raised by Zopa Bank “to £530 million, with £150 million raised in 2023 alone.”
Some of Zopa Bank’s innovations “enable customers to improve their financial health, gain access to better-priced credit, access market leading saving products, and to transfer card balances in a way that helps pay down credit, faster.”
Its underwriting models use AI and machine learning algorithms that “have been optimized over the last eight years, helping Zopa deliver stable and better than expected credit performance through these uncertain times.”
Jaidev Janardana, CEO at Zopa Bank said:
“Today’s financing is a clear market validation of Zopa Bank’s financial performance, pointing to strong investor confidence in its growth and in its ability to deliver strong financial performance despite the economic uncertainty. As a profitable business, it is also a seal of approval for our responsible and sustainable business model, our strong unit economics, and our vision to build Britain’s best bank. We are happy to have investors who share our excitement at the opportunity to serve more customers across more product categories as we get even closer to reaching full-year profitability in 2023 for the first time.”
Zopa Bank says that it “draws on the best of both digital and legacy banks, combining its strong digital capabilities with 18 years of lending experience and £8 billion in personal loans approved.”
In contrast to fintechs and e-money institutions, Zopa is a “real” bank.
A banking license means that Zopa is “held to the same standards as major high street banks in terms of how customers are safeguarded.” For example, its deposits are “protected by the Financial Services Compensation Scheme (FSCS) up to £85,000.”
This year alone Zopa Bank developed “a regulated BNPL product which offers a responsible alternative to existing providers, and the Smart ISA which allows savers to keep more of their hard-earned returns.”
Importantly, it did this by maintaining its net promoter score (NPS) at 82, the main market index of customer satisfaction. Since launching in 2020, Zopa Bank has “attracted £3.5 billion in deposits, more than £2 billion of loans on the balance sheet, and issued 470,000 credit cards.”
Building on its profitable foundations, today Zopa Bank says it “has 1 million customers generating an annualized revenue run rate of £250 million.” It is expected to “serve 5 million customers by 2027.”
Launched in 2020, Zopa Bank is the tech unicorn that raised over $500 million to build Britain’s best bank. Its unique P2P heritage rooted “in fintech brings 18 years of lending experience to its operations as well as £8bn funds in personal loans approved.”
Zopa Bank Limited is authorized by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.