Zopa, the world’s oldest peer-to-peer lender, is in a race against time to raise up to £150m to secure its banking licence.
The lender must have sufficient funds in place to launch its bank next month, or face losing the licence it was granted by the regulator last year.
A Zopa spokeswoman told LearnBonds: “We are currently in the process of raising funds, and this is connected with our banking licence.”
The peer-to-peer lender was awarded a banking licence with restrictions by the Financial Conduct Authority in December 2018.
Race against time
Under the terms of this agreement Zopa must draw up a living will in case the bank fails, must test a range of bank products, and raised sufficient cash to finance the bank, by 3 December, just a few weeks away.
Zopa, led by chief executive Jaidev Janardana (pictured), began testing bank fixed-rate savings accounts with 200 customers last week.
Zopa, alongside Funding Circle and Ratesetter, is referred to as one of the UK’s Big Three peer-to-peer lenders. These lenders use algorithms rather than banks to match consumer borrowers with a diverse range of investors.
Zopa, founded in 2005, is trying to raise cash during a turbulent time for the industry.
Tough times for peer-to-peer lending
Funding Circle, the biggest lender of this type in the UK, cut its growth forecast in half to 20 per cent in July.
Also, a number of peer-to-peer lenders such as Lendy and FundingSecure have collapsed this year owning hundreds of millions to investors.
In July, Zopa was planning to raise as much as £200m, according to Bloomberg, and that the lender was in discussion with private equity and sovereign wealth funds.
Zopa has originated over £4bn of loans between 500,000 people, generating around £250m of interest for investors, since it was founded 14 years ago.