Zopa has revealed it plans to launch a bank in a bid to boost its peer-to-peer business and give consumers more choice.
The “next generation” bank will offer deposit accounts to savers and overdraft alternatives to borrowers, extending Zopa’s existing range of investor and borrower products.
The deposit accounts will be protected by the Financial Services Compensation Scheme.
The peer-to-peer lending platform, which launched in 2005, has applied to both the Financial Conduct Authority and Prudential Regulation Authority for a banking licence.
Jaidev Janardana, chief executive of Zopa, said the bank will drive greater choice for borrowers, savers and investors, which he argued is “good for consumers and good for the economy”.
He said the regulatory authorities in the UK have created an environment that encourages companies to innovate, adopt new technologies, and increase competition in the banking sector.
“We are responding to the positive regulatory environment and building on our experience to bring yet more choice to the market,” he said.
Zopa has lent over £1.8bn to date attracts individual and institutional investors to lend on its platform.
Mr Janardana said establishing the bank will provide further diversified sources of funding to compete with “pureplay” banking.