Zopa is a British financial services company based in Buckinghamshire. It was founded in 2004 by a team from Egg internet bank and officially launched in 2005. Originally a peer-to-peer lending platform, the company announced in November 2016 that it planned to launch a bank in 2018.
It became the first peer-to-peer lender to reach £2billion in loans, reaching this milestone in January 2017.
Zopa Bank Products and Services
At launch, Zopa was focused on peer-to-peer lending services, allowing investors to lend money directly to UK customers. Available loans range from £1000 – £25000. This capital can then be used in place of taking out a loan from a traditional bank that might cover car payments, a deposit for a home or a wedding.
Zopa’s digital bank offering remains in progress; currently, the first product to be launched will be a savings account.
Investors can choose from four investment options. Investors who take on ‘risky’ borrowers can earn higher rates of interest over the life of the loan.
Borrowers pay an ‘origination fee’ that covers the administrative costs of arranging the loan, and also a ‘loan servicing fee’ that is deducted from each payment before it is passed to the investor.
An investor’s money is given to multiple borrowers – they then receive monthly repayments from each borrower to whom their money has been loaned. Investors can compound their interest returns by re-lending the money. Investors who want to sell their loans in order to have instant access to their money pay a 1% fee.
Zopa’s digital bank offering remains in progress; currently, the first product to be launched will be a savings account. Eventually, the bank plans to also offer credit cards, a money management app and more.
As a bank, Zopa is authorised by the Prudential Regulation Authority (PRA) and regulated by the Financial Conduct Authority (FCA) and Prudential Regulation Authority. Deposits of up to £85000 are covered by the Financial Services Compensation Scheme (FSCS).