Businessmodel of Zopa

Customer Segments

Zopa has a multi-sided business model, with two interdependent customer segments that are both needed in order to operate:

• Borrowers: Consumers who wish to obtain loans outside of traditional sources such as banks.
• Lenders: Individuals seeking better returns on their investment money from borrowers. ### Value Proposition

Zopa offers six primary value propositions: accessibility, convenience, cost reduction, risk reduction, performance, and brand/status.

The company creates accessibility by enabling borrowers who are normally seen as a risk by banks to obtain personal loans from other individuals who are able and willing to lend them money. Applicants can borrow up to £25,000, and loans are available for a wide variety of purposes.

The company offers convenience to borrowers by providing flexible terms. Loans are available over a period of one to five years. In addition, applicants can view tailored loan rates in just three minutes.

The company reduces costs by providing loans at lower rates than regular banks – they range from 5.9% to 12%. Moreover, it does not charge early repayment fees. Customers can repay as soon as they like or make extra payments without penalty.

The company reduces risk for borrowers by ensuring that loan quotes do not impact applicants’ credit scores. It reduces risk for lenders by performing credit and identity checks on borrowers and utilizing collections agencies to contact borrowers about missed payments.

The company has demonstrated strong performance. It has lent £1.49 billion from more than 63,000 lenders to over 150,000 consumers since 2005. It lends over £2 million a day on average, with the average loan amount equaling £7,300. For lenders, it provides an average return of 6.2% (after fees and before bad debts). Investors have earned millions of pounds in interest since the service began.

The company has established a powerful brand as a result of its popularity. It bills itself as Europe’s largest and the world’s oldest peer-to-peer lending service. It has been voted the “Most Trusted Loan Provider” by the Moneywise Customer Service Awards every year from 2010 to 2015. Other honors it has received include recognition as MoneySuperMarket’s “Best Personal Loans Provider” from 2014 to 2016, one of the UK’s “Most Disruptive Tech Companies” by Tech City Future Fifty, and “Growing Business of the Year” in 2015 by Real Business.

Channels

Zopa’s main channel is its website, through which it obtains most customers. The company promotes its offering through its social media pages.

Customer Relationships

Zopa’s customer relationship is primarily of a self-service, automated nature. Customers utilize the service through the main platform while having limited interaction with employees. The company’s website includes case studies and detailed answers to frequently asked questions. That said, there is a personal assistance component in the form of phone and e-mail support.

Key Activities

Zopa’s business model entails maintaining a robust common platform between two parties:  borrowers and lenders.

Key Partners

Zopa actively invites other entities to join it in partnership – specifically those who share its goal of “making money simple and fair.” Organizations of interest include affiliates, banks, brokers, and online retailers. The company currently maintains the following partnerships:

Metro Bank – Lends money to consumers on the Zopa platform, expanding its reach.

Uber – Obtains loans from Zopa for Uber drivers who want to buy their cars.

Unshackled – Receives financing from Zopa for handset sales in its mobile phone marketplace; it integrates Zopa’s technology into its website through the company’s Partner API, allowing customers to spread out handset payments over two years.

SalaryFinance – Obtains loans for its employees that can be repaid through salary deductions.

Key Resources

Zopa’s main resource is its proprietary software platform, which serves more than 63,000 lenders. It depends on its engineering employees to maintain and update the platform and customer service staff to provide support.  Lastly, as a startup it has relied heavily on funding from outside parties, raising $56.63 million from nine investors as of January 2014.

Cost Structure

Zopa has a cost-driven structure, aiming to minimize expenses through significant automation and low-price value propositions. Its biggest cost driver is likely transaction expenses, a fixed cost. Other major drivers are in the areas of customer support/operations and administration.

Revenue Streams

Zopa has one revenue stream: transaction fees. These include a fee for borrowers and an annual fee of 1% for lenders.