Zopa, Portrait of a Star


Pioneer in the crowdlending sector, Zopa is the premier P2P bank in the world. Launched in 2005 and based in Great Britain, it is today one of the UK’s largest peer-to-peer lending platforms, having lent £1.05 billion to over 110,000 people since its inception.

In the last 8 years following the financial crisis, Zopa has never stopped growing. Last year alone, they doubled the sum of money lent with loans amounting to £535 million in 2015 as compared to £267 million in 2014.

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In terms of earnings, Zopa revenues rose to £20.6 million in 2015, up from £11.5 million in 2014, which itself was more than double its £5.4m total the previous year.

Admittedly, the platform is not yet making a profit. Last year, it operated at a £8.9 million loss due to its heavy investments in more technology and in its infrastructures. Hiring also more than doubled. From a workforce of 70, the company now has 157 salaried employees.

But Zopa is optimistic and expects to be making a profit by next year.

The secret to its success: prudence

Zopa‘s success has largely been down to its strong risk controls and it is very careful to whom it lends money. Only lower-risk borrowers are accepted, generally with a credit score of A to C. Zopa looks not only at their credit history but at affordability factors too. Many people may have a good credit score, but if they are taking on debt they would struggle to repay, Zopa doesn’t want them. More than 75% of borrowers who apply are turned away.

As far as lenders are concerned, Zopa can rightfully boast that no customer has ever lost money, even in the chaotic days of the financial crisis. The average return over the past year was 8.1% after charges. To reduce risk, the spread of payments is no more than £10 with any one borrower. True, some of Zopa’s lenders have made less interest than expected because of defaults, but Zopa has launched a reserve fund as an extra line of defence against defaults.

Expanding and innovating

zopa2Zopa is not resting on its laurels.

It recently announced it will extend its product range to offer “Zopa Car ReFi”, a refinancing product for car loans. This will allow consumers to refinance existing car loans at a better rate.
 Zopa’s credit risk algorithms, combined with in-depth vehicle information, act together to provide customers with a free and instant personalised savings estimate, prior to those customers taking out the product.

Zopa‘s P2P lending platform will also be financing loans for customers of the newly launched online mobile retailer Unshackled. Customers can fund the purchase of handsets by taking out a finance deal with Zopa. The APRs will range from 9.7 per cent to 24.9 per cent. Customers will also be able to pay off early at no extra cost or make additional payments.

For increased efficiency, Zopa has teamed up with Pariti. The UK app Pariti has integrated Zopa‘s loan offers into its app allowing users to check whether they could get a better rate for their debt. Users can apply for a debt consolidation loan directly from the app. Pariti is using Zopa’s API to access data for the offers. The Pariti app, which claims 70,000 users, connects to a user’s existing bank accounts, analyses their spending history and helps them set a target for improvement. The Zopa integration enables Pariti users to discover if they could be paying less for their debt without affecting their credit score

Zopa is definitely a P2P star. And one that continues to rise. I bet traditional banks will be keeping quite a close eye on this lending platform.

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Sandra Bieniek is a professional journalist and translator working for international and on-line publications as well as for businesses and cultural institutions. With Master's degrees in both Journalism and International Affairs from Columbia University, she covers topics ranging from the environment to the economy, societal issues to human interest stories. She has also compiled reports submitted to the United States Congress on behalf of the International League for Human Rights and contributed to the annual publication “Issues Before the United Nations”.