Zopa, one of the UK’s three largest names in peer-to-peer lending, is to launch its first foray into banking after receiving partial authorisation last year.
The debut comes as the peer-to-peer sector is facing scrutiny from regulators and falling demand from investors, placing pressure on the likes of Zopa and its rivals.
The firm said it is today launching fixed-term savings accounts, which will be closed in an early testing phase due to limits placed upon the lender by the Financial Conduct Authority.
Zopa’s restricted banking licence only allows it to accept up to £50,000 in customer deposits. A spokesperson was unable to comment on a timeline for full authorisation.
The savings accounts mark the beginning of Zopa’s entry into retail banking, after it announced plans to pursue a second revenue stream last year.
Investor demand for peer-to-peer lending has been in decline, prompting firms to seek other profit-generating avenues. In July London-listed rival Funding Circle halved its sales growth targets for the year, tightened its lending criteria and put plans to expand internationally on hold.
City A.M. understands Zopa is currently seeking further funding. It disclosed a £60m funding round in November last year, and includes Spotify investor Northzone and one of the world’s oldest venture capital firms Bessemer among its supporters.
Around 200 customers will gain access to the new accounts, on a fixed term for one month at four per cent interest. Upon the lifting of its licence restrictions by the FCA, the product will receive protection from the Financial Services Compensation Scheme.
“Inviting existing customers to test our Fixed Term Saver is a major milestone in our bank journey,” said Zopa’s chief product officer Didier Baclin.
“It is a great opportunity to ensure that the product meets their expectations before the full launch next year so that we deliver a great product that customers can trust.”
The FCA is expected to introduce toughened legislation on peer-to-peer lending next month, after placing a number of firms under review.
Image credit: Zopa