Zopa bank is profitable after only 21 months

App-based Zopa Bank has become profitable, just 21 months after obtaining its UK banking license in June 2020.

Its initial profit is expected to be less than £1m for March, and the bank expects to be profitable going forward.

The bank spun off from peer-to-peer lending pioneer Zopa, after the company announced plans to become a bank in 2016. It closed its peer-to-peer lending business in December 2021 to focus on its digital banking offering.

Initially, Zopa Bank focused on the savings market, offering an account that can be created in seven minutes, with its banking services available on the Zopa app, which was launched in 2018.

Since its launch in 2020, the bank’s customers have made deposits worth £1bn, it has lent over £1bn and issued over 250,000 credit cards.

Zopa Bank CEO, Jaidev Janardana said: “Achieving 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 that have the greatest impact on finances. Today’s news makes Zopa one of the fastest-to-profit digital banks and reinforces our thesis on the importance of sustainable growth as a catalyst for accelerated product and market expansion. .

Establishing a digital bank requires a significant investment in technology, as well as the need for intensive marketing. As a result, they take several months or even years to become profitable. Zopa Bank has benefited from the experience of Zopa’s peer-to-peer lending business, which started in 2005 as one of the first of its kind. It has seen tremendous growth, making the company a fintech unicorn in 2021, after hitting a $1 billion valuation.

Zopa was designed to use the latest technologies, such as machine learning, to provide customers with similar experiences to using Netflix and Amazon. It decided to build the technology platforms for its banking products in-house due to its extensive in-house technology talent, with experience in building a peer-to-peer lending platform.

In July 2019, Zopa told Computer Weekly that she wanted to create a bank that would suit people at different stages of their lives. He said the philosophy was to make it easier and lower operating costs through technology and pass the savings on to better products, such as savings accounts with higher rates.

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