Digital bank Zopa raises £75 million to accelerate its growth

Digital bank Zopa has raised £75 million ($95m) in Tier 2 capital to further accelerate its growth, supporting its vision to become Britain’s best bank.

The funding will be used to fuel Zopa’s continuous growth and expansion. It brings the total capital raised by Zopa Bank to £530 million, with £150 million raised in 2023 alone. Some of Zopa Bank’s most exciting innovations enable customers to improve their financial health, gain access to better priced credit, access market leading saving products, and to transfer card balances in a way that helps pay down credit, faster.

Its best-in-class underwriting models are using cutting edge AI and machine learning algorithms that have been optimised over the last 8 years, helping Zopa deliver stable and better than expected credit performance through these uncertain times.

Jaidev Janardana, CEO at Zopa Bank said: “Today’s financing is a clear market validation of Zopa Bank’s financial performance, pointing to strong investor confidence in its growth and in its ability to deliver strong financial performance despite the economic uncertainty.

“As a profitable business, it is also a seal of approval for our responsible and sustainable business model, our strong unit economics, and our vision to build Britain’s best bank.

“We are happy to have investors who share our excitement at the opportunity to serve more customers across more product categories as we get even closer to reaching full-year profitability in 2023 for the first time.”

Zopa Bank draws on the best of both digital and legacy banks, combining its strong digital capabilities with 18 years of lending experience and £8 billion in personal loans approved.

In contrast to fintechs and e-money institutions, Zopa is a “real” bank.

A banking license means that Zopa is held to the same standards as major high street banks in terms of how customers are safeguarded. For example, its deposits are protected by the Financial Services Compensation Scheme (FSCS) up to £85,000. This year alone Zopa Bank developed a regulated BNPL product which offers a responsible alternative to existing providers, and the Smart ISA which allows savers to keep more of their hard-earned returns.

Importantly, it did this by maintaining its industry-leading net promoter score (NPS) at 82, the main market index of customer satisfaction. Since launching in 2020, Zopa Bank has attracted £3.5 billion in deposits, more than £2 billion of loans on balance sheet, and issued 470,000 credit cards. It has a rating of 4.6 / 5 on Glassdoor, one of the highest employee satisfaction scores across the UK financial services industry.

Building on its profitable foundations, today Zopa Bank has 1 million customers generating an annualised revenue run rate of £250 million. It is expected to serve 5 million customers by 2027.

Zopa was named “Bank of the Year” at the 2022 AltFi Awards, and previously “Best Personal Loan Provider” and “Best Credit Card Provider” at the British Bank Awards.