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September 11, 2023   Digital, NEO, Open Banking, Open Finance, Enterprise, FinTech and Alternative Finance, Fintech International, Fundraising, Investing, Trading, Innovation and Resources, Marketing, Strategy, Growth, Marketplace Lending/P2P, Lending, Digital Bonds, BNPL, Venture Funding and Building   No comments

UK Neobank Zopa Reaches 1M Customers and Raises $93M

Funding | Sep 11, 2023

Unsplash Colin Watts UK pound - UK Neobank Zopa Reaches 1M Customers and Raises $93M

Image: Unsplash/Colin Watts

Founded in 2004, Zopa has now achieved a milestone of 1 million customers and recently raised a $93 million funding injection. 

  • While waiting for IPO markets to reopen, Zopa, the neobank has successfully raised £75 million ($93 million) in a tier 2 debt fundraise. This fund will be utilized to strengthen its financial position, explore potential acquisitions, and continue the development of new products.
  • This recent funding round was spearheaded by IAG SilverStripe, along with participation from other investors.
  • Notably, Zopa has raised a total of £530 million to date.

Performance and Focus

  • Zopa has a rich history, being in operation since 2005, and was the first peer-to-peer lender in the UK. However, it transitioned to an online-only bank in 2020, offering a diverse range of products, including personal loans.
  • Zopa recently announced that it has reached a milestone of 1 million customers.

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  • Zopa has showcased a positive financial trajectory, already achieving EBITDA positive status. The company anticipates turning profitable for the entire year for the first time.  The company has projected an annualized run rate of £250 million ($312 million) for the current year.
  • The company's value proposition has become increasingly relevant, especially as the UK grapples with the cost-of-living crisis and rising interest rates. Zopa aims to provide a superior alternative to traditional banks, offering fairly priced credit and savings options.
  • Despite its growth and expansion, Zopa has no immediate plans to launch services outside the UK. The CEO, Jaidev Janardana, emphasized the vast opportunities within the UK market and mentioned the introduction of two new products this year. The company aims to launch two additional products the following year.

A Few Competitors for Comparison

Zopa, the pioneering UK neobank, faces competition from several financial institutions and platforms in the UK. Here are their main competitors:

  • Funding Circle Ltd.: A prominent peer-to-peer lending platform that focuses on small business loans. It has a significant presence in the UK and has been compared to Zopa in terms of size and reputation. However, it's worth noting that while Zopa offers personal loans, Funding Circle specializes in business loans.

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  • RateSetter: Once a major player in the P2P lending space, RateSetter transitioned a few years ago when it was acquired by Metro Bank. The bank integrated RateSetter's lending operations, allowing it to lend its savers' deposits using RateSetter's platform.
  • Leap: Leap is another platform that offers small, bank-style personal loans similar to Zopa. With Zopa's transition from P2P lending to banking, Leap remains one of the few P2P lending companies in the UK focusing on ordinary personal loans.

Neobank On The Move

Zopa's impressive journey from its inception as the UK's first peer-to-peer lender to its current status as a leading neobank underscores the transformative power of fintech. With a robust customer base and significant funding, Zopa is poised to redefine digital banking in the UK. As the neobank continues to innovate and expand its offerings, it sets a benchmark for others in the industry, highlighting the potential of digital-first financial solutions in today's interconnected world.

NCFA Jan 2018 resize - UK Neobank Zopa Reaches 1M Customers and Raises $93MThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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