Zopa has entered into a partnership with Uber, creating a potentially lucrative overlap between two of the most disruptive technology-based companies of the past decade.
Zopa loans will now empower Uber drivers to gradually take ownership of their own vehicles. The arrangement provides drivers with an alternative to paying rental fees or onerous monthly repayment costs – and a genuine sense that they are building a micro-business for themselves by using the Uber platform. Once these loans have been fully repaid, the borrower will own the car.
Any driver that is approved for such a loan must then drive, and work their way towards owning, a vehicle from Toyota Jemca (another of Uber’s partners). The loans will initially be fully funded by one of Zopa’s institutional lenders – but a statement from Zopa suggests that this may change over time:
“Secured auto-lending will initially be funded through an institutional partner. Depending on the performance of the market we will over time look to make these loans available to retail (individual lender) markets.”
The cost of borrowing will begin at 6.9% per annum over terms of 3 to 4 years. The maximum amount that may be borrowed is £22k – a fairly large loan size, by Zopa’s standards. The risks associated with this lending vertical are intriguing. Should a borrower under the scheme default, they stand not only to lose their vehicle but also their livelihood – providing a strong incentive to keep up to date with repayments. The Uber network will also provide a supreme level of transparency as to the movements and earnings of its drivers.
But according to both Zopa and Uber, the benefits will be felt first and foremost by the drivers themselves. Fraser Robinson, head of business development at Uber, explained:
“Our business is based on drivers and their ability to build their business on the Uber platform and as such we want to help them get on the road and start working on the Uber platform as cost effectively as possible. These deals add to the savings our partner-drivers can already achieve through Momentum, our loyalty programme for seasoned Uber partners.”
Uber drivers have been clamouring for a better deal of late. A group of drivers recently staged a protest outside the company’s New York offices over the state of their wages. According to Giles Andrews, Founder and CEO of Zopa, the newly available loans should allow those drivers progress towards vehicle ownership more swiftly, whilst hanging onto a greater proportion of their income in the process.
What will be the impact of this tie-up? Zopa smashed the UK P2P sector’s monthly origination volume record in April with a whopping £45.4m matched. It’s the first time that the original P2P lending service has held the honour since May 2014. Could the Uber partnership be driving this uptick in traffic?
A Zopa representative tells us that, in fact, the first Uber loan has only just been written (with many more in the pipeline, of course). In other words the platform’s recent surge in lending volume occurred independently of the new partnership.
Strategic partnerships with ethically similar companies appear set to serve as a foundation stone in Zopa’s ongoing development. Back in December 2014 the consumer lender tied up with energy technology company Flowgroup, in order to enable access to credit for low carbon boiler purchasers. The Uber partnership is similar in style – bringing greater purchasing power to a group of people who would otherwise be saddled with burdensome levels of debt and higher barriers to ownership.
We expect to see further tie-ups of this kind materialise over the course of 2015 – and for Zopa’s loan origination volumes to climb accordingly.
AltFi is returning to Amsterdam for its second annual Summit in the city. The inaugural event last year was a roaring success, with key figures from across Continental Europe's alternative finance and digital banking sectors highlighted. These included Jeroen Broekema, managing director of Funding Circle Netherlands, and Mieke van Engelen, head of innovative partnerships at ABN AMRO's standalone lending platform, New10.