ZOPA, the UK’s largest and oldest peer-to-peer lender, has announced that it is launching a bank.
The platform, which originates unsecured consumer loans, said on Wednesday that the bank will sit alongside its existing P2P business and will provide further diversified sources of funding for the company, which will give it “a strategic advantage over pureplay banking”.
Speculation has been rife over whether P2P lenders would start to apply for banking licences, so it is unsurprising that the industry’s veteran platform is the first one to reveal plans to enter the space.
The company said that its application with the Prudential Regulation Authority and the Financial Conduct Authority for a banking licence is in the early stages. It expects to gain approval within 15 to 24 months.
At launch, Zopa will offer Financial Services Compensation Scheme (FSCS)-protected deposit accounts to savers and overdraft alternatives to borrowers. It said that existing customers will get the first opportunity to try out its new products.
“We launched in 2005 to create a richer life for everyone by making money simple and fair,” said Jaidev Janardana, chief executive of Zopa.
“We have lent over £1.8bn and inspired a £100bn global industry. We have built a profitable, scalable and viable business.
“Yet we’ve only just begun. We want to launch a next generation bank to drive greater choice for borrowers, savers and investors, which is good for consumers and good for the economy”.
Zopa has already dipped its toe into the banking arena via its partnership with Metro Bank, which allows the challenger bank to lend through Zopa’s platform.
It is just the latest step in Zopa’s evolution from a niche lender to a financial heavyweight. In September, it announced its first securitisation deal and last month, Zopa’s head of capital markets Jonathan Kramer told Peer-to-Peer Finance News that the company is “definitely” planning more.
Despite its 11-year history, Zopa has only just swung into the black. Janardana told the audience at last month’s LendIt Europe conference that the company was profitable in September and will “be profitable moving forward”.
Financial statements in August showed that Zopa had lost £8.9m in the last financial year, a 45 per cent increase on the loss the previous year, which it attributed to investment in scaling up the business.