Founded in 2005, Zopa, the first peer-to-peer lending company, has lent out over £6 billion since its founding. 16 Years later Zopa is now ending its peer-to-peer lending business to focus on Zopa Bank.
Zopa has said the reason for ending peer-to-peer ending after 16 years is due to increasingly damaged customer trust over the last few years. Zopa has said:
“However, over the last few years, customer trust in P2P investing has been damaged by a small number of businesses whose approach led to material losses for retail investors.”
Along with this, the company also claims that regulation changes have led to an increase in operational costs for its peer-to-peer lending business and the cost of attracting new investors has also increased. Zopa says to remain sustainable it would need to reduce investor returns to a point where they would no longer be attractive.
Zopa Bank will be buying the peer-to-peer loan portfolio, meaning customers will receive their investments back by the 31st of January 2022.
Zopa’s peer-to-peer lending platform overall has seen much success – over 90,000 investors have used the platform lending out over £6 billion in total to over half a million people in the UK. In 2020 Zopa launched its bank (Zopa Bank) and since its launch the company has seen success in other areas alongside its peer-to-peer lending business.
The company now has an award-winning credit card on offer and fixed-term savings accounts. Zopa expects to hit full profitability by the end of 2021 after becoming profitable on a pre-provision basis back in August (2021).
In the near term, Zopa is expected to focus on providing competitive alternatives to savers via its fixed-term savings accounts and it has been said in the medium term the company would like to offer access to investment products such as stocks and shares trading.
Since the launch of Zopa Bank, the company has issued over 100,000 credit cards and attracted over £400 million in consumer deposits. Beyond this Zopa also partnered with ClearScore to use open banking data for helping customers immediately see if they are eligible for a Zopa credit card.
Previously Jaidev Janardana, CEO of Zopa, has said that he plans to take Zopa public sometime in 2022, but likely no earlier than the final quarter of next year. It is yet to be seen if this will happen, however, the company has proved itself to be sustainable as it is on the verge of reaching profitability and has ambitious plans for the future.