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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
U.K.-based digital bank Zopa landed $92 million from existing investors IAG Silverstripe, Davidson Kempner Capital Management LP and Augmentum.
The funding, which “cements and enhances” the company’s unicorn status, brings Zopa’s total raised to $880 million.
Since launching its digital bank in 2020, Zopa has attracted $3.69 billion (£3 billion) in deposits, added more than $2.46 billion (£2 billion) in loans on its balance sheet, and issued more than 400,000 credit cards.
Zopapulled in $92 million (£75 million) this week to bolster its digital banking capabilities, proving that the race is still going strong in the challenger banking arena. The funding brings the U.K.-based company’s total raised to more than $880 million.
While Zopa did not disclose an updated valuation, the company said it “cements and enhances” its unicorn status. Zopa originally became a unicorn in 2021 after its $304 million funding round.
Also undisclosed is the round’s lead investor. Interestingly, the lead investor in the company’s 2021 round, SoftBank, is not participating in today’s investment. Zopa CEO Jaidev Janardana told TechCrunch, however, that SoftBank is still an active board member. He also mentioned that today’s funding included investments from existing investors IAG Silverstripe, Davidson Kempner Capital Management LP, and Augmentum.
Founded in 2005, the former peer-to-peer lending platform launched its digital bank in 2020 and has since attracted $3.69 billion (£3 billion) in deposits, added more than $2.46 billion (£2 billion) in loans on its balance sheet, and issued more than 400,000 credit cards.
“We are happy to have investors who share our excitement at the opportunity to serve more customers across more product categories,” said Janardana. “This has already led to several profitable months in 2022 and will very likely convert into full-year profitability in 2023 for the first time.”
Zopa said that it will use the funding received today to pay off its debts and fuel upcoming mergers and acquisitions, which could begin this quarter.
Peer-to-peer lending platform and digital bank Zopalanded $304 million (£220 million) this week. The investment marks Zopa’s largest round to-date, and brings the U.K.-based company’s total funding to $792 million.
According to TechCrunch, today’s funding, which follows a $28 million investment received earlier this year, gives Zopa a post-money valuation of $1 billion (£750 million).
Softbank Vision Fund 2 led the round, which saw contributions from existing investors including Silverstripe, Northzone and Augmentum. Zopa anticipates the cash will help bring its banking tools to more U.K. consumers.
Zopa is on track to hit profitability by early next year. If it does, it will be one of the fastest digital banks in the U.K. to do so. Additionally, if Zopa continues on this path of success, the company is likely to IPO at the end of next year.
Founded in 2004, Zopa debuted its peer-to-peer lending platform at FinovateSpring 2008. The company has since evolved as a player in the challenger banking space. Zopa’s differentiator from competitors, however, is that it is not a fully-fleged bank. The company does not offer a checking account or payment card. Instead, it focuses on savings, loans, and credit-building tools.
Zopa received its banking license in June of 2020. Since transitioning from its flagship peer-to-peer lending model, Zopa has reached $931 million (£675 million) in customer deposits for its savings accounts, has issued 150,000 credit cards, and is now a top 10 credit card issuer in the U.K. based on new customers.
The company’s lending products have also seen success. So far this year, Zopa has disbursed over $8.3 billion (£6 billion) in loans. The company lends over $138 million (£100 million) each year in car loans.
Zopa has formed two recent partnerships that centralize on helping users build and access credit. Its partnership with ClearScore helps provide a pre-approved credit card to Zopa customers who have been declined credit, and its integration with CreditLadder enables renters to build credit by reporting their rental payments.
As for what’s next, Zopa says it is “focused on building a sustainable, profitable business model” that benefits both customers and shareholders.
Peer-to-peer lending platform and digital bank Zopa landed some extra funds this week, now that its new banking platform is starting to take off.
The U.K.-based company pulled in $28 million (£20 million) from existing investors, bringing its total raised to $465 million.
Investors in today’s round include IAG Silverstripe, which led the round, as well as Augmentum, Alternative Credit Investments, Venture Founders, and others. The company will use the funds to support the growth of its digital bank.
Zopa secured its banking license last June and has since transitioned its platform from a peer-to-peer lending operation to a digital bank with a peer-to-peer lending option. Since that time, Zopa began offering savings accounts, which have reached $346 million (£250 million) in customer deposits, and a credit card product that has made Zopa a top 10 credit card issuer in the U.K. based on new customers.
The new funding comes at a time when competition among digital banks is at an all-time high. Zopa is poised to do well in the battle for new clients and deposits, however. The company has built a well-established client base, resources, and relationships since it was founded in 2004 as a peer-to-peer lending platform.
Zopa CEO Jaidev Janardana echoes this. “Less than a year since launching our bank, we have exceeded our plan for growth, both in terms of customers and balance sheet,” he said. “This capital injection will enable us to continue on this accelerated path. Our strong entry to the U.K. savings and credit card markets shows the organic appeal of our products and we are happy to have investors who share our excitement at the opportunity to serve more customers across more product categories.”
News first broke of Zopa’s plans to launch a bank in November of 2016. During the four-year-period since then, the U.K.-based P2P lender has been slowly progressing toward becoming a fully fledged challenger bank.
Today, Zopa took this initiative a step further, launching a credit card offering. Zopa said that the card is specifically designed to help users stay in control of their money and their debt.
The card has two tools that help users manage their money. The first is called Safety Net. The Safety Net feature allows users to lock up some of their available credit balance to use for small, unexpected expenses. Customers decide how much of their available credit to lock away and can easily unlock access to the credit via the mobile app.
The card, in combination with the mobile app, also offers real time balance updates. The feature enables users to see how much credit they have available in real time, without needing to wait for the transaction to show up in their balance statement.
“The credit card market hasn’t caught up with the standard of other digital products and customers have been waiting too long for a better experience,” said Zopa CEO Jaidev Janardana. “At Zopa, we believe that credit cards need to be revolutionized so we have built a card designed around putting the customer in control. Industry firsts such as our Safety Net feature and handy tools like real time credit balance updates help customers manage their money effectively, enabling them to build a good credit profile.
Zopa’s credit card also offers users the ability to view spending categories, instantly freeze and unfreeze the card, turn on/off certain spending categories such as gambling and cash withdrawals, and make contactless payments.
The Safety Net tool is just the latest example of Zopa launching customer-first products for the underbanked population. In October of last year the company launchedBorrowing Power, a tool that leverages AI to show users what makes up their personal borrowing power and guide them toward actions to help improve it.
P2P lender and challenger bank Zopa recently formed a partnership with Paylink Solutions to tap into the company’s cloud-based digital income and expenditure product, Embark.
Paylink’s Embark will help Zopa quickly find the most suitable loan product for clients by understanding their affordability. The tool taps into credit report data and leverages open banking technology to offer lenders a 12-month view of customer bank statements. Embark also provides identity verification and document upload technology.
“Teaming up with Paylink Solutions to deploy the Embark tool at this time has enabled us to provide an even better experience for our customers,” said Zopa Chief Customer Officer Clare Gambardella.
The partnership is part of Zopa’s initiative to increase its digital efforts. Embark will enable Zopa’s potential borrowers to use the self-service portal or use an online form with the help of a live customer service agent.
With Embark, Zopa customers also have access to free debt advice. Customers can self-refer to PayPlan, a U.K.-based debt help tool that provides personalized debt management plans.
“From day one, we have seen Zopa’s customers referring themselves to PayPlan; this is in an age where customers want to self-serve more,” said PayPlan’s Head of Partnerships, Andrew Alder. “It’s becoming more important for organizations, solution providers, and debt advice providers to work closely to create innovative ways for customers to still be able to access advice in a frictionless way.”
U.K.-based peer-to-peer lender Zopaannounced this week that it has been awarded a full U.K. banking license and will move forward with its plans to launch a digital bank.
The bank will offer the Zopa Fixed Term Savings Account, which features FSCS protection up to £85,000. Zopa plans to introduce a credit card later this year.
“Now more than ever the banking industry needs innovative, agile providers who work on behalf of customers,” Zopa CEO Jaidev Janardana said. “At a time when people want great value, fair financial services products, and simple, intuitive digital experience(s), Zopa offers consumers a compelling and credible alternative they can trust.”
Founded in 2005, and one of Finovate’s earliest alums, Zopa raised $182 million last December in preparation for bank launch announced this week. The company has secured a total of more than $464 million in funding since inception.
Village Capital is out with its State of Financial Health Startups report which looks at the areas of innovation with the “greatest potential to improve the wellbeing and inclusion of marginalized communities in MENA.”
The State of Financial Health Startups in MENA acknowledges the attention paid to areas of fintech such as digital payments and e-commerce. At the same time, the goal of the report is to focus on those ways that fintech can solve specific problems in the region, specifically the challenge of inequality.
The report highlighted six fields of fintech innovation that are mostly likely to meet this challenge, as well as 12 startups that are active in these areas. The fields were:
saving and wealth-building technology
employment tech
digital ID
financial literacy services
access to capital
alternative lending
The twelve featured startups were:
Rumman (Palestine)
SmartCrowd (UAE)
Kader (Jordan)
Khtwteen (Egypt)
Hawiyati (Jordan)
Valify Solutions (Egypt)
Finllect (UAE)
Merakido (Egypt)
Fawaterak (Egypt)
Fundbot (Lebanon)
Ciwa (Morocco)
Solfeh (Jordan)
The Catalyst Fund, supported by BFA Global, UK aid, JP Morgan Chase and Rockefeller Philanthropy Advisors, has announced its latest fintech cohort.
The Fund has accelerated 31 portfolio companies that have raised collectively more than $64 million in follow-on fundraising since inception. The Fund awards each of its portfolio companies $100,000 in grant capital, as well as venture-building support for six months, and one-on-one networking with investors and corporate leaders to help them scale their businesses. Of the companies making the cut were a number of fintechs including:
FlexFinance (Nigeria)
Paymenow (South Africa)
Mango Life (Mexico)
Graviti (Mexico)
KarmaLife (India)
“We believe we are facing a catalytic moment during which there is an opportunity to use technology to help low-income consumers and small businesses recover from the impact of COVID-19 and build greater financial resilience for the future,” Catalyst fund director Maelis Carraro said.
Here is our weekly look at fintech around the world.
Asia-Pacific
Malaysian recurring payments platform Curlec announces funding from 500 Startups.
Thai cashless solution provider for businesses SYNQA raises $80 million in Series C investment.
TechWireAsia looks at the impact of COVID-19 on Indonesia’s emerging fintech industry.
Sub-Saharan Africa
Nigerian fintech KiaKia goes live with its app that enables users to invest in the funding of secured personal and business loans.
Centbee, a fintech based in South Africa, adds the ability to purchase prepaid electricity, airtime, and data via a new feature on its BitcoinSF wallet.
GhanaWeb features Ghanaian cross-border, money transfer company FXKudi.
Central and Eastern Europe
Edenred, a French prepaid corporate services provider, launches Apple Pay mobile payments for digital meal vouchers in Romania.
Lithuania-based identity verification firm iDenfy partners with U.K. online banking platform Cashaa to help cryptocurrency investors in India avoid fraud.
Austria gains a new insurtech competitor as Hong Kong-based bolttech partners with local telcom Drei to bring the first non-insurance switch program to the country.
Middle East and Northern Africa
Egypt-based fintech MoneyFellows raises $4 million in Series A funding.
Global tech ecosystem, Hub71, teams up with Mashreq Bank and First Abu Dhabi Bank to help startups open bank accounts in the UAE.
Commercial Bank of Dubai and cross-border payment provider Thunes announce partnership, enhancing CBD’s ability to operate in countries such as India, the Philippines, Pakistan, and Bangladesh.
Central and Southern Asia
India-Based Slice raises $6 million for digital payments.
BharatPe, a QR code-based, merchant payments company based in India, enters the point of sale business with the launch of its Bharat Swipe PoS solution.
Alphabet’s growth equity arm, CapitalG, invests $28 million in India-based SME lender Aye Finance.
Latin America and the Caribbean
BBVA announces that its mobile banking platform GloMo will support Apple Watch users in Uruguay.
Mexican bank Banorte and on-demand delivery firm Rappi partner to launch a financial services company in Mexico.
Central Bank of Brazil suspends WhatsApp payments in the country, citing competitiveness concerns.
SumUppartners with donation software company to help charities to go contactless for Christmas.
TransferWisepartners with Visa to enable real-time transfers to debit cards.
This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.
While rumors have been circulating for days, Zopaconfirmed today that it has raised $182 million (£140 million) in its largest fundraising to date. The capital comes from IAG Silverstripe, the investment division of IAG Capital, and will, in the words of Zopa CEO Jaidev Janardana, enable the P2P lending pioneer to fulfill the regulatory capital requirements and lift restrictions on its banking license.
“This new funding means we have concluded the fundraising phase of our bank mobilization,” Janardana said. “Definitive agreements to provide the funding have been finalized and are subject to final approvals including regulatory change of control.”
IAG Silverstripe has been an investor in Zopa since the fall of 2018, and holds a minority stake in the company. Zopa noted that its bank will operate along with its current P2P financing business (Zopa Limited) as part of the larger Zopa Group.
The funding for Zopa arrives at an opportune time for the company, which will celebrate its 15th anniversary next year. Granted an “Authorisation with Restriction” by U.K’s Financial Conduct Authority on December 4, 2018, Zopa had twelve months to meet the capital requirements that would enable the company to go ahead with a full launch. Even as the deadline drew near last week, Zopa representatives expressed confidence in the company’s ability to raise the necessary capital.
“We continue to hold our bank license with restrictions and are working closely with the regulators to gain our full license,” Janardana explained. “We are excited that, once approved, Zopa will be able to launch its bank alongside its peer-to-peer business and offer a broader set of products to our customers.”
One of Finovate’s earliest alums, the company demonstrated its P2P lending platform at FinovateSpring 2008, billing itself as the “world’s first social finance company,” In the years since its founding in 2005, Zopa has lent 5 billion pounds in unsecured personal loans to customers in the U.K. Headquartered in both New York and London, the company launched a new savings solution last month that offers a fixed-term account with 4% interest as part of its entry into the world of banking. In October, Zopa introducedBorrowing Power, a new offering that uses AI to help customers see what determines their personal borrowing power.
Fenergoteams up with PwC to provide KYC compliance and client onboarding as managed services.
SumUpforges partnership with German fintech Penta which will offer the company’s card reader to its customers.
Personeticsjoins Amazon Web Services (AWS) Partner Network (APN) Global Startups Program.
Temenosinks partnership with Egyptian National Post Organization.
Maybank Group, the fourth largest bank by assets in Southeast Asia, goes live with Avaloq’s banking suite.
Installment payment specialist Splititpartners with smart bed solution provider ReST.
SoFiscores New York BitLicense, which will permit the company to offer crytocurrency trading services in the state.
Jack Henry to provide a comprehensive technology upgrade, including deployment of its SilverLake core system, for Parkside Financial Bank & Trust.
This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.
P2P lending company and newly initiated challenger bank Zopa is taking a first step on its banking journey with the rollout of a new savings product. The U.K.-based company is launching fixed-term savings accounts that will be available for terms of one month and pay 4% interest.
This news comes after the company received partial authorization from the Financial Conduct Authority (FCA) last December and launched bank products with its staff as beta testers. This partial authorization is the reason behind the limited nature of the savings accounts. Zopa is currently operating in a period called AWR (authorization with restrictions), meaning the company has met all of the FCA’s conditions and is allowed to begin testing bank products.
Under those restrictions, Zopa cannot accept more than $64,000 (£50,000) in customer deposits, so it is only inviting 200 current investors to test out the new savings product. There is no word yet on when the restrictions will be lifted.
“Inviting existing customers to test our Fixed Term Saver is a major milestone in our bank journey,” said Zopa CPO Didier Baclin. “It is a great opportunity to ensure that the product meets their expectations before the full launch next year so that we deliver a great product that customers can trust.”
Zopa’s choice to start its bank product offerings with a high-interest savings account doesn’t come as a surprise. As we covered last month, multiple fintechs are offering high interest bearing accounts in order to attract customer deposits away from their primary, traditional bank.
Last year, Zopa closed a $77 million (£60 million) investment round that contributed to the company’s total of $297 million in funding it’s received since launching in 2005. Zopa is seeking to raise additional funding this year, stating that the fresh capital will offer the boost it needs to have the FCA’s restrictions removed.
Zopa’s former CEO Doug Dolton debuted the P2P lending platform at FinovateSpring 2008 at Finovate’s very first show in the Bay Area. The company was founded in 2005, pioneering peer-to-peer lending in the U.K., and has since amassed 400,000 customers and facilitated $5 billion (£4 billion) on its platform.
Revolutunveils metal cards in silver and space grey.
Chief Administrative Officer of the Royal Bank of Scotland interviewsBioCatch CEO.
ITSectorinaugurates 6th Software Development Center that will focus on the financial sector, AI, and 5G.
This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.
P2P lending company and challenger bank Zopaannounced something consumers can feel good about this week. The U.K.-based company, which brands itself as the FeelGood Money company, launched a tool to help borrowers find the best rate for their loan.
The new tool, Borrowing Power, leverages AI to show users what makes up their personal borrowing power and guide them toward actions to help improve it. Each score is linked to a Zopa loan and shows the user their eligibility and rate. Borrowing Power also shows users what-if scenarios– that is, how their rate may increase if they take certain actions to improve their score. Ultimately, the tool has the potential to positively impact consumers’ financial behavior.
“Customers deserve to know their eligibility for credit, current credit scoring is merely scratching the surface,” said Zopa CPO Didier Baclin. “We have effectively broken open the black box to understand what is going on and, combining this data with additional information about the customer, are able to give bespoke actionable insights to our customers that could enable them to improve their credit risk in a short time frame and then ultimately be able to borrow from Zopa at a better rate.”
The Borrowing Power score, which ranges from one to 10, is simpler than a credit score. The score is comprised of only five elements:
Combination of credit rating data
Credit utilization
Credit limits
Hard searches
Affordability based on personal circumstances
Zopa leverages this data to inform consumers if they can improve an aspect of their credit profile, and in what time period. The company makes it easy for borrowers to understand the loan by showing them the actual interest rate. And, making the score as consumer-friendly as possible, Zopa only uses a soft credit inquiry so that it doesn’t impact their credit score until the loan is official.
Zopa was founded in 2005, pioneering peer-to-peer lending in the U.K., and has since amassed more than 400,000 customers and facilitated $5+ billion (£4+ billion) on its platform.
Last December Zopa made fintech headlines by launching its new bank in beta. The company is currently operating the bank in a period called AWR (authorization with restrictions), meaning it has met all of the FCA’s conditions and is allowed to begin testing the new banking products.
Zopa’s former CEO Doug Dolton debuted the P2P lending platform at FinovateSpring 2008 at Finovate’s very first show in the Bay Area.
