Zopa on track to be fastest digital bank to reach profitability after £220m investment

UK challenger bank Zopa has secured £220m in funding, as it edges closer to becoming profitable.

Softbank Vision Fund 2 served as the lead investor, with support also coming from existing Zopa backers Silverstripe, Northzone and Augmentum.

The funding round put its valuation at £750m, which is around $1bn and would make it a unicorn, according to a report from TechCrunch.

Zopa fully launched its banking platform in June 2020 and since then it has attracted £675m in deposits for its fixed savings accounts. It has also issued 150,000 credit cards, which makes it a top ten credit card issuer.

Its loan products have also seen high usage in the past year. It claims to have reached over £6bn in disbursed loans and is currently lending more than £100m per year in car loans.

Part of its growth has been through partnerships with other providers. Zopa recently formed an agreement with ClearScore, which helped Zopa offer pre-approved credit cards to users that were previously declined credit products.

Zopa claims it is on track to reach profitability within the next ten weeks, which would make it one of the fastest digital banks in the UK to do so, taking just 18 months since receiving a banking license.

This is the second funding round raised by the digital bank in 2021, having previously collected £20m round led by IAG Silverstripe.

Zopa is not the only European digital bank to experience success this month. Germany-based N26 reached a $9bn valuation following the close of a $900m investment, which it claims to be the largest financing of a digital bank in Europe.

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