Zopa CEO hints at move into SME lending

By Daniel Lanyon on Thursday 6 October 2022

Alternative LendingDigital Banking

The peer-to-peer lender turned bank has been solely focused on consumer loans since being founded in 2005, but its CEO says the company may move into offering SME finance.

Zopa CEO hints at move into SME lending
Image source: Zopa

Zopa is considering moving into the SME lending market, after nearly 18 years of offering consumer loans, according to its CEO Jaidev Janardana. 

The company, which is also reportedly in talks to raise a fresh round of funding ahead of a much-touted initial public offering (IPO), completed its shift to being a fully licensed bank two years and has since expanded its personal lending and savings products.

Speaking at the Sifted Summit in London on Tuesday, Janardana said Zopa was looking at potential acquisitions to help it move into the SME lending space.

Despite its sole focus on consumer loans since its founding in 2005 as the original peer-to-peer lender, Janardana said “we think of it [SME lending] as a natural extension”.

Targeting loans of c.£100k, the move would push Zopa into direct competition with listed alternative lender Funding Circle. The two, alongside Ratesetter, made up the ‘big 3’ peer-to-lending platforms in the UK. Although all have moved away from their original model of operating as a pure marketplace.

Zopa now largely funds through its banking license, deposits and securitisations, having shuttered its peer-to-peer business at the end of last year. Ratesetter too exited the P2P market after being acquired by Metrobank. Funding Circle largely funds its loans today via deals with asset managers and banks.

Janardana said the potential move was not being prompted by a reaction to difficulties in its consumer loans business but rather the long-term attractiveness of the asset class. 

“UK SME lending is one of the riskiest assets to be looking into right now,” he said.

“The problem of falling consumer incomes is more problematic for SMEs than consumer lenders,” he added.

Zopa, Janardana says, is operating at break-even since it first announced profitability earlier this year following a raise of $300m in funding last year in a round led by Softbank, when it first achieved a unicorn valuation (higher than £1bn).

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Funding Circle
RateSetter
Zopa Bank

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