Neobanks, also known as digital banks or challenger banks, have been on the rise in the United Kingdom in recent years. Whether it be Monzo, Revolut, or Starling Bank, these innovative financial institutions operate solely online, offering a range of banking services without the need for physical branches. Zopa Bank, another UK-based neobank that provides loans, credit cards, and savings accounts, has hit the headlines.
Zopa raises $87M ahead of IPO
In recent times, Klarna filed for an IPO in the US, it was believed to set a new benchmark for European fintech giants. Amidst this sluggish IPO prospect, Zopa is making waves with a £68 million equity funding round. While the company has not disclosed its valuation, multiple resources claim it has surpassed a valuation of over $1 billion, attaining unicorn status.
Earlier this year, the UK neobank raised £75 million Tier 2 capital earlier this year, taking the total funding raised so far to over $500 million.
Led by Denmark’s AP Moller Holding, this latest investment gears the fintech up for the 2025 launch of its flagship current account and generative AI-powered financial tools. The funding will fuel innovations that empower users with better credit, savings options, and financial health solutions.
Chetan Mehta, head of growth equity at AP Moller Holding, added: “We are excited to support Zopa on its journey to revolutionise the UK’s financial services industry. Zopa’s remarkable customer-centricity enables it to deliver lasting value and a positive impact on the financial lives of millions of UK consumers. Today’s investment also reflects our confidence in Zopa’s robust and profitable business model that aligns with our commitment to sustainable, long-term growth.”
Amidst this, here are some facts about Zopa.
1. A pioneer in peer-to-peer lending
Founded in 2005 by Giles Andrews, James Alexander, Richard Duvall, David Nicholson, and Tim Parlett, Zopa revolutionised the financial world by introducing peer-to-peer (P2P) lending in the UK. It allows individuals to lend directly to borrowers, bypassing traditional banks. Over the years, it has facilitated loans worth billions, establishing itself as a key player in the fintech space.
2. Transition to a digital bank
In 2020, Zopa pivoted from P2P lending to launch its digital bank. The transition enabled Zopa to offer broader financial services, including savings accounts, credit cards, and loans, making it a full-stack digital banking solution for UK customers.
3. Strong growth in deposits and loans
Since its digital bank launch, Zopa has experienced rapid growth, surpassing £3 billion in deposits and over £2 billion in loans issued by 2023. Its credit card offering has also gained traction, helping the company attract over a million customers.
4. Focus on profitability and sustainability
Zopa became profitable in 2023, a significant milestone in the fintech sector where profitability often lags. This achievement reflects its focus on sustainable growth, a departure from the high-burn, growth-at-all-costs model often seen in startups. The bank also expects to double profits in 2024 on a 35% annual revenue jump.
5. Key partnerships
Zopa has consistently ranked as one of the UK’s most trusted financial brands. Its user-friendly digital platform, transparency, and customer-focused approach have earned it numerous awards, including being named the Best Personal Loan Provider multiple times. It has also recently partnered with Octopus Energy to enter the UK’s £23 billion renewable energy market and John Lewis to offer personal loans directly to its 23 million customers.
Jaidev Janardana, CEO at Zopa Bank said: “Today’s fundraise validates our financial performance and growth potential. Since launching our bank in 2020, we’ve consistently offered financial products that offer great value and ease to our customers, supporting our vision to build Britain’s best bank. We are thrilled to have investors who share our excitement at the opportunity to serve more customers across more product categories as we aim to become the go-to bank for millions of consumers.”
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