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Challenger Bank to Lend Through Zopa

Zopa’s strategic partnership puzzle is beginning to mesh together – and it’s clear that disruption is the binding theme among the many tiles.

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The UK’s top challenger bank, Metro Bank, has begun lending to consumers via the Zopa marketplace. Metro became the first high street bank to have emerged in the UK in over a hundred years after acquiring a full banking license in 2010. A further six challenger banks have been authorised since April 2013, including the likes of Aldermore and Shawbrook.

The tie-up between Zopa and Metro Bank is the first of its kind to have taken place on UK soil. We’ve witnessed linkages between Funding Circle and Santander and RBS, and between Assetz and RBS, but these partnerships were founded upon a system of reciprocal referrals. The banks drive the borrowers that they’re unable to work with towards the peer-to-peer lenders, which in turn advocate the banks’ various services within their customer bases. No UK bank has ever channeled funds to consumers (or SMEs) via a peer-to-peer platform, until now.

Giles Andrews, CEO and Co-Founder of Zopa, shed light on the partnership:

“This is another milestone for Zopa and the P2P industry as this partnership brings together two key challengers to the traditional financial services landscape and signals our intent to become a mainstream service. Partnering with Metro Bank is an exciting move for Zopa as I believe both companies share the same values in providing exceptional customer service but through different channels.”

“This unique partnership is the first of its kind in the retail banking sector and a clear sign that Zopa is a trusted platform not only for consumers but also for institutions to deploy their funds. We’re delighted that Metro Bank is lending through Zopa and we look forward to working even closer with Metro Bank on future opportunities and products.”

As Giles explains, a general overlap in principle exists between Metro Bank and Zopa. Both companies are challengers to the established status quo, and both place a firm emphasis on customer care. A similar set of connections tie together Zopa and the revolutionary taxi app Uber – between which a partnership was struck barely two weeks ago. The aim of that alliance is to empower Uber drivers to more affordably take ownership of their vehicles using a Zopa-funded purchase loan.

As to the numbers involved in the Metro Bank arrangement, Zopa representatives tell us that “millions” will be lent through the platform each month. Those millions will go towards making up auto loans, home improvement loans and debt consolidation loans.

Exactly how many “millions” come pouring into the Zopa marketplace remains to be seen. The platform smashed the UK record for monthly origination in April, according to AltFi Data, with a colossal £45.4m lent. Giles Andrews indicated then that he expects monthly origination to continue to rise, with Zopa on track to lend £550m over the course of 2015. It’s apparent now that strategic alliances with similarly disruptive, ethically aligned firms will serve as the springboard from which Zopa aims to reach these new heights.

Craig Donaldson, CEO of Metro Bank, offered his take on the funding commitment:

“At Metro Bank we’re committed to revolutionising UK banking and we’re delighted to have partnered with Zopa, a fellow financial challenger. We are continually looking to work with partners that can benefit our customers and Zopa are the perfect players in the P2P space to help us lend funds to consumers." 

“The partnership we have with Zopa is a cultural fit that works perfectly with our commitment to providing a convenient and customer-focused banking experience and we look forward to working with them closely.”

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