ZOPA GETS $57 MILLION IN FUNDING FOR DIGITAL BANK: UK marketplace lender Zopa has raised a £44 million ($57 million) funding round from undisclosed existing investors, marking its biggest funding round to date. The money will be used to capitalize its digital bank, which it plans to launch in the future. Zopa applied for a banking license with the UK’s Financial Conduct Authority (FCA) in 2016, and was granted one in May 2017. Its previous funding round in June last of year was used to build the infrastructure of the new bank, and to launch a developer center in Barcelona to develop features including credit card processing for the venture.
The marketplace lender will initially roll out savings products for its digital bank. However, with time, it will expand into other services including unsecured lending with credit cards, car finance, and peer-to-peer (P2P) investment products, according to Finextra. Already having experience in lending will likely make it easier for the startup to roll out a variety of products for its customers using its new bank. This will enable customers to view more of their finances in one place, making banking more convenient and increasing customer satisfaction.
Neobanks in the UK need to beware of this new competition. Neobanks have mostly been competing with one another, but as new players like Zopa get into the space, it’s poised to grow more crowded. While neobanks mostly start out by offering a deposit account with a debit card, Zopa will likely be able to offer more services from an early stage, as it already has a lending business in place. It is also likely that many of its existing customers will choose to bank with Zopa, rather than going with another neobank, as they already have their lending businesses on the platform. As such, neobanks should focus on building out their ecosystems to provide a wider array of services and remain competitive.