ZOPA has finally been awarded a banking licence, more than two years after first announcing its plans to launch a digital bank.
The world’s oldest peer-to-peer lender unveiled the news on Tuesday, explaining that it has a “bank licence with restrictions” ahead of being granted a full licence.
This so-called ‘mobilisation’ phase is where City regulators the Financial Conduct Authority and the Prudential Regulation Authority put some restrictions in place, Zopa said.
It will be granted a full licence once it meets the conditions set by the regulators during this mobilisation phase, akin to the way high street banks are regulated, Zopa added.
“Acquiring our banking licence is the starting point for Zopa to become a major force in retail banking,” said Jaidev Janardana (pictured), chief executive of Zopa.
“When we pioneered the P2P lending model globally in 2005, we did so by listening to customers and creating a better product for them. We will bring the same focus to our banking products – drawing on tech innovation, our values of fairness and transparency, and better customer service to help even more people to feel-good about money.”
Zopa first announced its plans to launch a bank in November 2016, corroborating industry speculation that P2P lenders would start applying for bank licences in order to offer a wider range of services.
At the time of the initial announcement, Zopa said it expected to gain approval within 15 to 24 months.
Zopa’s new bank will sit alongside its core P2P offering, which it said would create the world’s first hybrid P2P and digital bank. It said it will roll out its new products across next year, which will include a fixed-rate savings account – which will be protected by the Financial Services Compensation Scheme – a credit card and a money management app.
The bank’s launch will signal a key milestone in the evolution of the P2P industry.
Zopa said each new product has been built using innovative proprietary technology that avoids the pitfalls of traditional legacy banking.
It also said that its products will avoid catches like sign-up offers which are not available to existing customers, hidden fees and charges.
More details about the rates on offer from its new products have not yet been released. However, last year Janardana said the bank would offer unsecured personal loans with no early repayment charges and credit cards with no introductory offers but a flat rate, as well as savings and investments that prioritise existing customers.
He also said it would offer auto-loans, allowing users to do a soft-search for products.
Zopa has lent nearly £4bn to UK consumers since launching in 2005. It now has 450 employees across its London and Barcelona offices.
Last month it announced that it had raised £60m in its largest funding round to date, to help fund the capital requirements for its bank.