UK-based digital bank Zopa has announced plans to shut its peer-to-peer (P2P) lending platform to focus on banking operations.
Zopa, which launched the business 16 years ago, will buy the P2P loan portfolio and return investment balances to P2P customers by the end of January 2022.
Zopa stated that “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 retail investors.
“Linked to this, the changing regulation which followed raised the operational costs of running a P2P business, as well as the cost of attracting new investors to the Zopa platform.”
The lender plans to focus on the banking business as it has witnessed strong demand for its offerings such as credit cards and fixed-term savings accounts.
In June 2020, Zopa received a full banking licence from UK’s Financial Conduct Authority (FCA) and launched a digital bank.
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“We’re able to help more people through our fully regulated Bank, offering our customers a wider range of financial products,” Zopa noted.
Zopa said that the closure will not impact interests that investors have already built up and Zopa Bank will continue to service the loans.
Recently, Zopa secured $303m in funding round, which Zopa said was its “largest” fundraise to date.
The digital lender is also planning to enter the buy-now-pay-later market.
In October, reports emerged that British digital lender Monzo plans to raise £300m in new funding to strengthen its balance sheet.