Digital bank Zopa has raised $300m (£220m) to drive its next phase of growth, supporting its plan to become the strongest performing digital bank for savings and lending in the UK.
The round was led by Softbank Vision Fund 2, with participation from Chimera Abu Dhabi. The round was further supported by existing investors IAG Silverstripe, Davidson Kempner Capital Management LP, NorthZone, and Augmentum Fintech.
The deal is currently pending regulatory approvals from the PRA and the FCA.
Zopa’s latest financing was announced at the Global Investment Summit (GIS) 2021, a one-day event hosted in London by the Prime Minister and attended by members of the Royal Family, aimed at attracting billions in foreign investment to every part of the country.
The funding will be used to meet the capital requirements of Zopa bank’s rapidly growing balance sheet. Recent growth has been fuelled by the continued expansion of Zopa’s suite of digital-first financial products and has attracted some of the smartest and brightest talent from across the industry.
Zopa’s most exciting innovations will enable users to improve their financial health, gain access to better priced credit, access saving products based on individual preferences towards interest and flexibility, and to transfer card balances in a way that helps pay down credit, faster.
Its recent partnership with ClearScore offers a Zopa pre-approved credit card to users who may have previously been declined credit products, while its integration with CreditLadder makes it possible for renters with thin files to improve their credit score by reporting their rental payments.
Jaidev Janardana, CEO at Zopa said: “In a very crowded ecosystem that often focuses on current accounts or other free money management offerings, Zopa meets customer needs by focusing on how they borrow and save, the two things that have most impact on their finances.”
“Softbank Vision Fund 2’s investment into our future is a clear validation of Zopa’s responsible, sustainable and profitable approach to lending, our strong unit economics, and our vision to build the UK’s strongest performing bank with the most happy customers.”
Sourav Sen, investor for SoftBank Investor Advisers added:“We believe Zopa’s fast-growing market penetration reflects high customer demand for adaptable financial services within a usable platform that can be customized to their specific needs. Zopa is fast emerging as a leading player in the UK’s nascent neo banking sector and we are proud to partner with Jaidev and the team on this journey.”
Minister for Investment Gerry Grimstone added: “Softbank’s investment in Zopa’s digital banking platform is a testament to the UK’s enduring strength as a global hub for investment, built on our competitive economy, cutting-edge innovation and world-leading capability across areas like science, services, and research and innovation. The Global Investment Summit will demonstrate how we can use inward investment to nurture technological developments and propel our economy towards a more prosperous, exciting future.”
Zopa bank draws on the best of both digital and legacy banks – combining its strong digital capabilities to 16 years of lending returns and £6 billion funds in personal loans approved.
In contrast to fintechs and e-money institutions, Zopa is a “real” bank.
It acquired its banking license last year and is regulated by the FCA and the PRA. 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.
Since the launch of the bank in June 2020, Zopa has attracted £675m in deposits for its fixed savings accounts, issued 150,000 of its British Bank Award-winning credit cards becoming a top 10 credit card issuer, and more than doubled revenue per customer.
JPMorgan acted as Sole Placement Agent for Zopa on this transaction.