Digital bank Zopa has raised £75 million ($93m) to support and drive its growth strategy targets for 2023, as well as to achieve its goal of becoming Britain’s ‘best bank’.
The latest funding round – which was led by existing investors – for the bank helps cement its unicorn status after processing £3bn worth of deposits and £2bn worth of loans since the company’s inception in 2020.
Zopa’s new funds will enable the digital bank to meet capital requirements for its growing balance sheet. The company also intends to push heavily into its M&A strategy which may kickstart this quarter.
“Today’s equity round reaffirms the support of our investors despite the challenging economic environment,” said Jaidev Janardana, CEO at Zopa.
“It is a clear validation of Zopa’s responsible, sustainable and profitable approach to lending, our strong unit economics, and our vision to build Britain’s best bank.
“We are happy to have investors who share our excitement at the opportunity to serve more customers across more product categories. This has already led to several profitable months in 2022 and will very likely convert into full-year profitability in 2023 for the first time.”
Despite the economic uncertainty, London-based Zopa has continued to grow revenue by more than 100% year-over-year, fuelled by the continued expansion of its suite of digital-first financial products.
Some of its more innovative products have enabled customers to improve their financial health, gain access to better-priced credit, access market-leading saving products, and transfer card balances in a way that helps pay down credit faster.
Janardana added: “Zopa takes an agile and dynamic approach to credit risk which means it has continued to lend responsibly in a changing environment.
“As a result, our business remains resilient with record loan origination volumes, stable credit performance comparable to pre-pandemic levels, and continued innovation.”
Unlike most neo-banks and fintechs, Zopa holds a banking licence which means that Zopa is held to the same standards as major high-street banks in terms of how customers are safeguarded.