Neobanks, also known as digital banks or challenger banks, have been on the rise in the United Kingdom in recent years. Whether it be Monzo, Revolut, or Starling Bank, these innovative financial institutions operate solely online, offering a range of banking services without the need for physical branches.
£75M Tier 2 capital
Launched in 2020, Zopa Bank is another UK-based neobank that raised over $500 million so far to become Britain’s best bank, and now they have announced a raise of £75 million Tier 2 capital. This brings the total capital raised by Zopa Bank to £530 million, with £150 million raised in 2023.
The recent round was led by IAG SilverStrip and it comes after raising an equity tranche seven months back. This will be used to further accelerate the company’s growth, fueling its vision to become Britain’s best bank. Further, the recent debt fundraise will be used to boost its finances, plan some acquisitions, and continue building more products alongside its existing services.
Jaidev Janardana, CEO at Zopa Bank said: “Today’s financing is a clear market validation of Zopa Bank’s financial performance, pointing to strong investor confidence in its growth and in its ability to deliver strong financial performance despite the economic uncertainty. As a profitable business, it is also a seal of approval for our responsible and sustainable business model, 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 as we get even closer to reaching full-year profitability in 2023 for the first time.”
Vision and growth
Zopa was founded in 2005 by Giles Andrews, James Alexander, Richard Duvall, David Nicholson, and Tim Parlett. Earlier this year, the UK fintech unicorn also acquired DivideBuy’s point-of-sale (POS) finance technology and lending platform in response to consumers’ desire to simplify their finances and bring a simple and fair solution for larger purchases ranging from £25 to £30,000.
Building on such features that help customers handle finances, Zopa Bank currently has 1 million customers generating an annualised revenue run rate of £250 million and expects to serve 5 million customers by 2027. Besides this, since its debut in 2020, Zopa Bank has attracted £3.5 billion in deposits, more than £2 billion of loans on balance sheet, and issued 470,000 credit cards.
Further, the UK-based fintech firm has been eyeing IPO for a long, and going public could provide Zopa with the necessary reserves and visibility to continue its growth trajectory in the evolving fintech landscape.
