high risk investments. While this has left the industry in turmoil, forcing some players to quit the market, a London-based P2P lender is adapting its business model in response to the challenges and has now decided to embrace what it initially stood against.
Zopa is a British financial services company, which has been one of the major players in the country’s peer-to-peer lending industry. Despite once having hoped to make banks a thing of the past, the company has now decided to concentrate on being a bank and shut down its P2P lending arm after 16 years. Accordingly, Zopa recently informed about 60,000 P2P investors that they may have to find a new home for their cash, since their money will be handed back to them by the company.
Back in 2005, Zopa was launched with the aim of taking down “faceless corporations”, by claiming to offer better returns to consumers on their savings. At the time, the company was hailed as a radical online financial exchange, which enabled millions of ordinary people to lend and borrow money from each other.
However, as the industry began to collapse, the financial service provider decided to remodel its business strategy and jumped ship in 2020. After securing a full UK banking license in June last year, the company has been offering fixed-rate savings accounts, personal loans, credit cards, as well as car finance. “Sadly, over the last few years, customer trust in P2P investing has been damaged by a small number of businesses whose approach led to material losses for customers investing in those platforms. Linked to this, the changing regulation in the sector has made it challenging to grow and remain commercially viable,” the company told its customers.
Accordingly, will buy its investors’ loans at their current face value, free of fees that are normally charged for a loan sale. This would mean the customer would receive his money back, along with any interest paid by the borrowers to the date of sale.
