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Digital Bank Zopa Hits Profitability

Digital Bank Zopa Hits Profitability | Fintech Finance

After just 21 months from acquiring its banking licence, Zopa bank, the digital bank that raised $500 million from the early investors of Slack, Uber, and Alibaba to build the UK’s best bank for borrowing and saving, has hit profitability. This is a huge feat for two reasons. Not only is it the first time Zopa bank has turned a profit, it has done so in rapid speed, making it one of the fastest digital banks ever to achieve profitability. 

As of January 2022, out of 249 digital banks worldwide, only 13 have been profitable, 2 of which were UK based, Starling and OakNorth Bank. Many digital banks or fintechs prioritise growth over profit, but to achieve both shows the success of some of these organisations. Zopa bank is big, is up-and-coming and is proving why it deserves a seat at the table as the organisation expects to remain profitable from this point onwards and continue their accelerated growth.

Zopa bank’s unique P2P heritage brings 16 years of lending experience to its operations as well as over £6 billion funds in personal loans approved. Zopa users rate its service as excellent with 4.7 out of 5 rating on TrustPilot, typifying its public approval and appreciation.

The news of Zopa bank’s profitability was announced at the Innovate Finance Global Summit by CEO Jaidev Janardana. He commented on how “the past year has been a highly successful one for Zopa as we’ve exceeded our targets across new and existing products and raised $300 million led by Softbank to fuel our accelerated growth.” The past year has no doubt been successful. In fact, Since launching our bank in 2020, Zopa have attracted £1 billion in deposits, more than £1 billion of loans on balance sheet, issued circa 250,000+ credit cards becoming a top 5 credit card issuer in the UK, and tripled (3x) their revenue per customer. 

“Hitting profitability in just 21 months is a testament to our unique model that meets customer needs by focusing on how they borrow and save – the two things with the most impact on finances. Today’s news makes Zopa one of the fastest digital banks to achieve profitability ever and reinforces our thesis on the importance of sustainable growth as a catalyst for accelerated product and market expansion.”

Zopa’s offerings clearly appeal to their customers, as their Fixed Term Savings account alone amassed £1 billion in customer savings in 18 months topping the tables 15 times, offering great value and an intuitive digital experience

There is also an understanding of how to help younger users with their financial management too. In February, Zopa bank launched the Smart Saver, a “hybrid” savings account to help young users at the beginning of the saving journeys better save in a post-pandemic world. This was clearly well received as it attracted 10,000 customers and £8m deposits in less than a month! Appealing to various demographics is a key ingredient for success and is clearly a contributing factor for Zopa’s profitability. 

Looking ahead in the future, what’s to come is clearly bright and exciting. Zopa bank anticipates closing 2022 with a balance sheet of £2bn and, again, more than doubling their revenues. They will also tap into the BNPL market, which was a key trend that dominated the financial services landscape in 2021 and looks set to maintain its importance in 2022. Zopa will launch a fully regulated Zopa BNPL product in the fall, targeting big-ticket items.

 

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