Zopa Bank is marking its first year with a full banking licence, here is what the previous 12 months have delivered for the offshoot of the world’s oldest peer-to-peer lender.
The lender was initially awarded a bank licence with restrictions in December 2018 but then had to raise an additional £140m to meet the necessary capital requirements to operate as a fully fledged bank.
It has since launched fixed term savings products, credit cards and is planning a foray into buy-now-pay-later schemes as well as a public listing.
Here is how it has fared so far.
Zopa released its savings rates in August 2020.
It has attracted more than £400m in customer deposits and won several awards for its new savings products.
They were initially offered to its existing P2P lending platform’s users at 1.05 per cent for one year, 1.15 per cent for two years, 1.26 per cent for three and four years and 1.3 per cent for five years.
Its two-year fixed rate has previously been a best buy while its one-year product was rated as excellent by comparison website Moneyfacts.
However, its rates are currently lower at 0.95 per cent for one year, 1.12 per cent for two, 1.25 per cent for three or four years and 1.36 per cent for five.
These are close to being best buys but don’t top the tables.
The highest one-year savings rate is currently on offer from Gatehouse Bank for 1.1 per cent, rising to 1.2 per cent for two years, according to Moneyfacts.
Savers can get 1.3 per cent with Wesleyan Bank for three years or 1.35 per cent for four.
A five-year fixed rate savings account from Vanquis Bank also currently pays 1.6 per cent.
Additionally, investors can get between two per cent and 5.3 per cent with Zopa’s P2P lending products, albeit without the Financial Services Compensation Scheme protection.
Zopa launched its credit card in October 2020.
It includes a “safety net” feature that allows customers to lock away part of their available credit balance for small unexpected expenses.
Customers set their own personal financial buffer when they initially set up their card and receive an instant notification to let them know they’re getting close to their safety net limit.
Zopa’s credit card also includes real time balance updates and spending alerts.
Card information can be accessed through Zopa’s app where users can also freeze their card if it is lost or stolen.
Its interest or annual percentage rate ranges from 9.9 per cent to 34.9 per cent, which is on the high side.
Zopa Bank said it has become a top ten credit card issuer in the UK, attracting in excess of 100,000 credit card customers in nine months
Challenger banks and any startups in financial services often struggle to make a profit at first.
But Jaidev Janardana, chief executive of Zopa Group, said the bank’s revenue per customer has doubled since launching and it is on track to reach profitability before the end of the year.
“The past year has been a highly successful one for Zopa Bank and we’ve exceeded our targets across new and existing products,” Janardana said.
“We built a bank to better meet the needs of UK consumers and our year one success endorses that approach. We look forward to using the momentum that we have gained to expand our products and services further and to help more customers.
“At Zopa, we are also passionate about building a sustainable business and so I’m excited to see that our trajectory puts us on course to be amongst the fastest digital banks to achieve profitability.”