Zopa, the peer-to-peer (P2P) lender turned banking challenger, has launched its first fixed-rate savings accounts.
The range of accounts pay 1.05%, all the way up to 1.3%. They mark the first products launched since the bank was granted its full licence two months ago.
How does it shape up to competition?
These accounts, which start at deposits of £1,000, can hold up to £85,000 protected by the Financial Services Compensation Scheme (FSCS).
Zopa will pay 1.05% on a one-year fixed-rate bond, 1.15% two-year term, 1.26% on three and four-year fixed-rates, and 1.3% on a five-year fixed-rate.
The lender’s banking entry makes it the ninth bank to offer UK consumers 1% interest on one-year fixed-rate deposits.
Charter Savings Bank’s one-year fixed-rate pays 1.22% on deposits of at least £5,000 – one of the best savings account offerings currently on the market.
A number of smaller banks recently upped their interest rates to attract more deposit holders.
Paragon Bank pays 1.2% on a one-year fix, having recently raised its rate by 0.45% – a notably large increase. Newcomer Allica Bank also boosted its one-year offer from 0.85% to 1.16% last week.
Zopa’s move into banking
Zopa landed its full UK bank licence as recently as June. As well as savings, the fintech is also planning to rival credit card providers with a credit-based offering.
Without mentioning specifics, Zopa says it will address the “poor service and unclear pricing” offered by their existing card providers.
The lender, founded in 2005, already offers personal and auto loans. It also offers a suite of investment products. It approves roughly £1 billion of loans a year and has around 300,000 customers.
To date, the lender has raised more than $460 million. “Acquiring our banking licence is the starting point for Zopa to become a major force in retail banking,” Zopa’s CEO Jaidev Janardana said in 2018.
Since launching, Zopa Bank has integrated with charity StepChange’s 60 second debt checker and benefit calculator. It has also created “Borrowing Power”, a tool which helps customers improve their credit score and borrow at a lower rate.
In February, Zopa partnered with Starling Bank to help the UK challenger bank boost its balance sheet with consumer loans. The “forward flow” was a temporary arrangement whilst Starling built out its own lending capability.