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Zopa launches digital bank and 1.1% fixed saving deal

Paloma Kubiak
Written By:
Paloma Kubiak

Zopa has been granted a full UK bank licence enabling it to launch a digital bank and a range of competitive fixed term savings deals.

The peer-to-peer lender has launched a digital bank and offers five fixed term savings accounts ranging from 1.10% AER for a one-year deal and 1.6% AER for its five-year offering.

Initially these savings accounts are available to its 60,000 existing Zopa P2P investors as a “thank you for their loyalty” before being rolled out to the public, though it can’t give a specific date yet.

Zopa confirms the money in the cash products is held separately to its P2P business and as well as being regulated by the Financial Conduct Authority and the Prudential Regulation Authority, deposits up to £85,000 are protected under the Financial Services Compensation Scheme (FSCS).

As the savings accounts are fixed products, savers won’t be able to access their money before maturity. The money will then be transferred to a savings holding account once the fixed deal has matured.

The minimum deposit amount is £1,000, and the maximum is £250,000. The account can only be opened and managed online or via its app.

Zopa, which launched in 2005 and offers personal loans of up to £25,000 and the chance to invest in lending, through a peer to peer platform, also plans to launch a credit card later in the year, “designed to put customers in control of their borrowing”.

Jaidev Janardana, Zopa CEO, said: “Now more than ever the banking industry needs innovative, agile providers who work on behalf of customers. At a time when people want great value, fair financial services products and simple, intuitive digital experience, Zopa offers consumers a compelling and credible alternative they can trust.

“Securing our banking licence enables Zopa to play a wider role in the financial lives of our customers, as well as offering much needed choice and competition to the wider market.

“Beyond the current pandemic, Zopa is uniquely placed to provide a compelling alternative to traditional banking by leveraging its significant technological and financial services expertise to offer a wider range of great products, including savings and credit cards, alongside its personal loans and investments.”

Zopa was granted a banking licence with restrictions in December 2018 but faced losing it a year later unless sufficient capital was raised to meet its regulatory requirements. Zopa secured a last minute cash injection of £140m from IAG Silverstripe Partners, an investment arm of US-based IAG Capital.

It has 320,000 active customers, including loans customers and 60,000 investors.