Founded in 2005, Zopa entered P2P lending when the sector was better known as a possible provider of micro-loans for the unbanked population of emerging markets rather than a viable alternative to banks in Western countries. At the time, thanks to falling global interest rates and accommodative lending practices from banks that eventually led to the 2008/09 global financial crisis (GFC), sourcing loans with attractive yields were fairly easy to come by in many parts of the world. Fast forward a few years, and the GFC has caused lenders to be more cautious of their practices which has shut out scores of borrowers from receiving loans from banks.
For the P2P lending sector, this change in lending habits by banks and traditional lenders has allowed them to step in and become an alternative for sourcing loans. In addition, with yields remaining low, lending marketplaces provide investors an opportunity to gain greater returns on their cash than from similar fixed income securities.
After participating in both the early years for P2P lending and its current rocket ship growth phase, Zopa announced today that they have achieved the £1 billion milestone for loans transacted on their platform. With the milestone, Zopa is the first UK P2P lender to reach the £1 billion mark.
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Speaking to the BBC today and reiterating remarks he said in the past, Giles Andrews, CEO and Co-Founder of Zopa, stated that more than providing loans to the unbanked, they are able to beat banks, with better terms being made available on their platform. According to Zopa, with their current growth, the firm now has a 2% share of the UK unsecured loan market.
Zopa’s march toward £1 billion has intensified over the past year and a half. After totaling £265 million in loans on their platform during 2014, they have surpassed that figure so far in 2015, and expect to reach above £550 million this year. Looking ahead, Zopa believes that by the end of 2016 they will achieve £2 billion in loans processed on their platform. .
Other statistics revealed by Zopa today are that the £1 billion consisted of 61,000 lenders to 146,000 borrowers. Overall, the average lending rate was 5% with over £57 million in interest returned to lenders. Of the loans, Zopa reported that Car Loans composed 40% of the total, followed by Home Improvements and Debt Consolidation at 22% each.