{"id":642490,"date":"2023-04-28T10:06:22","date_gmt":"2023-04-28T15:06:22","guid":{"rendered":"https:\/\/news.sellorbuyhomefast.com\/index.php\/2023\/04\/28\/zopas-emotional-journey-to-becoming-a-bank\/"},"modified":"2023-04-28T10:06:22","modified_gmt":"2023-04-28T15:06:22","slug":"zopas-emotional-journey-to-becoming-a-bank","status":"publish","type":"post","link":"https:\/\/newsycanuse.com\/index.php\/2023\/04\/28\/zopas-emotional-journey-to-becoming-a-bank\/","title":{"rendered":"Zopa\u2019s emotional journey to becoming a bank"},"content":{"rendered":"<div id=\"content-header\">\n<h2>Zopa Bank\u2019s CEO sees no reason why the app-based bank should not be as big as the high street giants<\/h2>\n<\/div>\n<div id=\"content-center\">\n<ul>\n<li><i data-icon=\"1\"><\/i><\/li>\n<li><i data-icon=\"2\"><\/i><\/li>\n<\/ul>\n<div id=\"contributors-block\">\n<p><img decoding=\"async\" src=\"https:\/\/cdn.ttgtmedia.com\/rms\/computerweekly\/Karl-Flinders-profile-pic-2022-140x180px.jpg\" alt=\"Karl Flinders\">\n\t\t\t\t\t<\/p>\n<p><span>By<\/span><\/p>\n<ul>\n<li>\n\t\t\t\t\t<a href=\"https:\/\/www.techtarget.com\/contributor\/Karl-Flinders\">Karl Flinders,<\/a><br \/>\n\t\t\t\t\t\t<span>Chief reporter and senior editor EMEA<\/span>\n\t\t\t\t\t\t<\/li>\n<\/ul>\n<p>\n\tPublished: <span>27 Apr 2023 14:17<\/span>\n<\/p>\n<\/div>\n<section id=\"content-body\">\n<p>Zopa spent 15 years pioneering the peer-to-peer lending sector, only to drop that business to become a bank.<\/p>\n<p>CEO <a href=\"https:\/\/www.linkedin.com\/in\/jaidev-janardana-a4071b3\/?originalSubdomain=uk\">Jaidev Janardana<\/a> tells Computer Weekly how he helped make one of the first fintech firms even more fintech.<\/p>\n<p>Janardana joined Zopa in 2014 as chief operation officer (COO), before becoming CEO a year later. At the time, it was a peer-to-peer lending financial technology firm, having pioneered the sector since its formation in 2005.<\/p>\n<p>But within two years, Janardana, an engineer who moved into the business side of banking in the US banking sector, kicked off the process of transforming Zopa into a bank and closing down its peer-to-peer lending business.<\/p>\n<p>Janardana grew up in India, where he trained as an engineer before initially working in the telco sector on network planning and design. After attending business school, he moved into financial services. In 2002, he joined Capital One in the US.<\/p>\n<p>At Capital One, he was focused on data-based marketing and product design, where he got a taste for using data to personalise banking offerings, the lifeblood of fintechs. \u201cCapital One was one of the first innovators in financial services, particularly around how to use data to create more personalised, customised offers,\u201d he tells Computer Weekly.<\/p>\n<p>In late 2007, Janardana moved to the UK with Capital One to manage credit risk for the bank\u2019s UK business. This saw him hold the role during the global financial crisis, which hit the world in 2008. At this time, his tech background helped him with statistical modelling.<\/p>\n<p>But it was at Zopa that he returned to his tech roots. \u201cOne of the things that attracted me to Zopa is that we could use technology in a far more meaningful fashion,\u201d he says.<\/p>\n<section data-menu-title=\"Early years at Zopa\">\n<h3><i data-icon=\"1\"><\/i>Early years at Zopa<\/h3>\n<p>When he joined as COO in 2014, he was focused on helping build a good lending business, making sure the company could use data and technology. This included using machine learning models to make credit decisions as early as 2015.<\/p>\n<blockquote>\n<div>\n<figure>\n    \u201cOne of the things that attracted me to Zopa is that we could use technology in a far more meaningful fashion\u201d<br \/>\n   <\/figure><figcaption>\n    <strong>Jaidev Janardana, Zopa Bank<\/strong><br \/>\n   <\/figcaption><\/div>\n<\/blockquote>\n<p>He says this has provided the organisation, now a bank, with good foundations for the future, where artificial intelligence (AI) will play an increasingly important role in the finance sector.<\/p>\n<p>\u201cToday, we have eight years of data on the use of machine learning. A lot of businesses talk about [using machine learning], but very few can claim this much experience with it,\u201d he says.<\/p>\n<p>Zopa loans, where decisions are generated by machine learning, have performed well.<\/p>\n<p>In 2016, with Janardana at the helm as CEO, the company was thinking about what was next for the business. \u201cWe decided that expanding our product set would be a very good idea,\u201d he says.<\/p>\n<p>This was the moment when Zopa set out on its journey to become an app-based bank.<\/p>\n<\/section>\n<section data-menu-title=\"Emotional goodbye\">\n<h3><i data-icon=\"1\"><\/i>Emotional goodbye<\/h3>\n<p>It was also the moment that spelled <a href=\"https:\/\/www.computerweekly.com\/news\/252510580\/Zopa-to-focus-on-banking-after-closing-peer-to-peer-lending\">the end of its peer-to-peer lending business<\/a>, which it had set up in 2005. \u201cLenders [on our platform] always made money, even through Covid, but ultimately, when we looked at the consumer sentiment, there was a lot of reticence. At the same time, regulation had become overbearing for peer-to-peer lending,\u201d says Janardana. \u201cWe did not feel that business could scale and achieve compelling economics in the long term.\u201d<\/p>\n<blockquote>\n<p><img decoding=\"async\" src=\"https:\/\/cdn.ttgtmedia.com\/rms\/computerweekly\/Jaidev-Janardana-Zopa-140x180px.jpg\" alt>\n  <\/p>\n<p><span><strong><span>\u201cWe have eight years of data on the use of machine learning. A lot of businesses talk about [using machine learning], but very few can claim this much experience with it\u201d<\/span><\/strong><\/span><\/p>\n<p><span>Jaidev Janardana, Zopa Bank<\/span><\/p>\n<\/blockquote>\n<p>He says closing the peer-to-peer lending business, which shut in 2021, was a very hard, emotional decision. \u201cZopa was the world\u2019s first peer-to-peer lending company. We were very emotionally attached and thought it delivered great results for us and our customers.\u201d<\/p>\n<p>Janardana had his first <a href=\"https:\/\/www.computerweekly.com\/news\/252453794\/Zopa-gains-banking-licence-and-prepares-launch\">meeting with UK regulators<\/a>, the Financial Conduct Authority and Prudential Regulation Authorities, in November 2016 to inform them of the company\u2019s plan to launch a bank. After a three-and-a-half-year journey to get its UK banking licence, Zopa Bank was launched in June 2020.<\/p>\n<p>Today, Janardana sees no reason why a Zopa should not be as big as Barclays or HSBC. \u201cI don\u2019t see why not. We have been a bank for two-and-a-half years, and we are about to hit one million customers and about \u00a33.5bn in deposits. If we can maintain that level of growth for five to seven years, we become significant.\u201d<\/p>\n<p>To achieve this, the company must stick to its roots, established in 2005. \u201cThe trick would be to make sure we don\u2019t lose our customer centricity, ensure we continue to innovate and embrace new trends, technology and data, and transform those trends into good products for our customers.\u201d<\/p>\n<\/section>\n<section data-menu-title=\"The digital banker\">\n<h3><i data-icon=\"1\"><\/i>The digital banker<\/h3>\n<p>Janardana understands how technology can improve banking and uses his experience in the banking sector to ensure the company keeps up with evolving tech and consumer demand.<\/p>\n<p>He applied these skills when he first joined Zopa, at the time a pure peer-to-peer lender. Although he had worked in financial services for a long time, he had not worked with loans.<\/p>\n<p>\u201cThe first thing I asked was what people look for in loans. I was told they look at whether it will be approved or not, and what price they will get. So I asked when does the customer get this?\u201d<\/p>\n<p>The answer was that they get it three or four days after the process begins, which Janardana decided was not good enough. \u201cAt the time,<b> <\/b>Zopa did not make instantaneous approvals to the extent I would like,\u201d he says.<\/p>\n<p>When he joined in 2014, Zopa was instantly approving 20% of loan applications. \u201cWe upgraded our tech, and at the same time upgraded our credit modelling, so we could deploy our first machine learning-based models,\u201d he says.<\/p>\n<p>The proportion of loan approvals that were instantaneous increased to 60% after the machine learning models were introduced, and by about 2020, 99% were approved in less than five seconds.<\/p>\n<p>Zopa Bank uses this technology to approve applications for car finance, credit cards and \u201cbuy now, pay later\u201d (BNPL) products.<\/p>\n<\/section>\n<section data-menu-title=\"Making a fintech more fintech\">\n<h3><i data-icon=\"1\"><\/i>Making a fintech more fintech<\/h3>\n<p>It is inevitable that even the most advanced fintech firms will quickly lose their advantage if they fail to keep up with technology and customer demand, as well as changes in the banking sector.<\/p>\n<p>\u201cWith technology, there is progression, and you need to embrace it and move forward. As a company, I believe we have done a good job of understanding the latest trends and how to use that,\u201d says Janardana. \u201cAt Zopa, we have thought very carefully about marrying the \u2018fin\u2019 and the \u2018tech\u2019 properly.\u201d<\/p>\n<blockquote>\n<div>\n<figure>\n    \u201cWith technology, there is progression, and you need to embrace it and move forward. At Zopa, we have thought very carefully about marrying the \u2018fin\u2019 and the \u2018tech\u2019 properly\u201d<br \/>\n   <\/figure><figcaption>\n    <strong>Jaidev Janardana, Zopa Bank<\/strong><br \/>\n   <\/figcaption><\/div>\n<\/blockquote>\n<p>He says this paid off during the Covid-19 pandemic. \u201cA lot of fintechs blew up, but we are still here. What we did was ensure we have a lot of people that are tech savvy alongside people that have experience of lending over a long period of time, through crises \u2013 people like me,\u201d he says.<\/p>\n<p>Such experience is vital, says Janadarna. \u201cModels are just rear-view mirrors that tell you what happened in the past, but you can\u2019t drive a car only looking in the rear-view mirror. You have to look forward, and that is where the experience counts. You can see where models might have loopholes and where they might fail. This helps inform where it might not be appropriate to use them.\u201d<\/p>\n<p>Zopa Bank now has about 710 staff, a third of whom are pure technologists, and about 100 work with products and data. These are mainly in the UK, with a small team in Spain and some customer service functions outsourced to a company in South Africa.<\/p>\n<p>Zopa\u2019s revenue was about \u00a3170m in its latest financial year. It has \u00a32bn loans on the balance sheet and \u00a33.5bn in deposits. It started off focused on savings and borrowing, but is expanding into areas such as BNPL, <a href=\"https:\/\/www.computerweekly.com\/news\/365531304\/App-based-Zopa-bank-buys-BNPL-fintech\">where it recently acquired fintech DivideBuy<\/a>.<\/p>\n<\/section>\n<\/section>\n<section id=\"DigDeeperSplash\">\n<h4>\n\t\t\t<i data-icon=\"m\"><\/i>Read more on IT for financial services<\/h4>\n<ul>\n<li><a id=\"DigDeeperItem-1\" href=\"https:\/\/www.computerweekly.com\/news\/365534972\/Nordic-app-based-bank-offloads-its-peer-to-peer-lending-business\"><br \/>\n\t\t\t\t\t<img decoding=\"async\" src=\"https:\/\/cdn.ttgtmedia.com\/visuals\/ComputerWeekly\/Hero Images\/handshake-agreement-deal-2-adobe_searchsitetablet_520X173.jpg\" srcset=\"https:\/\/cdn.ttgtmedia.com\/visuals\/ComputerWeekly\/Hero%20Images\/handshake-agreement-deal-2-adobe_searchsitetablet_520X173.jpg 960w,https:\/\/cdn.ttgtmedia.com\/visuals\/ComputerWeekly\/Hero%20Images\/handshake-agreement-deal-2-adobe.jpeg 1280w\" alt ><\/p>\n<h5>Nordic app-based bank offloads its peer-to-peer lending business<\/h5>\n<div>\n<p><img decoding=\"async\" src=\"https:\/\/cdn.ttgtmedia.com\/rms\/computerweekly\/Karl-Flinders-profile-pic-2022-140x180px.jpg\" alt=\"KarlFlinders\">\n\t\t\t\t\t\t\t\t\t<\/p>\n<p><span>By: <span>Karl\u00a0Flinders<\/span><\/span>\n\t\t\t\t\t\t\t<\/p>\n<\/div>\n<p>\t\t\t\t<\/a><\/li>\n<li><a id=\"DigDeeperItem-2\" href=\"https:\/\/www.computerweekly.com\/news\/365531304\/App-based-Zopa-bank-buys-BNPL-fintech\"><br \/>\n\t\t\t\t\t<img decoding=\"async\" src=\"https:\/\/cdn.ttgtmedia.com\/visuals\/ComputerWeekly\/Hero Images\/banking-finance-growth-investment-charts-adobe_searchsitetablet_520X173.jpg\" srcset=\"https:\/\/cdn.ttgtmedia.com\/visuals\/ComputerWeekly\/Hero%20Images\/banking-finance-growth-investment-charts-adobe_searchsitetablet_520X173.jpg 960w,https:\/\/cdn.ttgtmedia.com\/visuals\/ComputerWeekly\/Hero%20Images\/banking-finance-growth-investment-charts-adobe.jpg 1280w\" alt ><\/p>\n<h5>App-based Zopa bank buys BNPL fintech<\/h5>\n<div>\n<p><img decoding=\"async\" src=\"https:\/\/cdn.ttgtmedia.com\/rms\/computerweekly\/Karl-Flinders-profile-pic-2022-140x180px.jpg\" alt=\"KarlFlinders\">\n\t\t\t\t\t\t\t\t\t<\/p>\n<p><span>By: <span>Karl\u00a0Flinders<\/span><\/span>\n\t\t\t\t\t\t\t<\/p>\n<\/div>\n<p>\t\t\t\t<\/a><\/li>\n<li><a id=\"DigDeeperItem-3\" href=\"https:\/\/www.computerweekly.com\/news\/252529243\/Fintech-makes-job-cuts-to-workforce-amid-falling-demand\"><br \/>\n\t\t\t\t\t<img decoding=\"async\" src=\"https:\/\/cdn.ttgtmedia.com\/visuals\/German\/article\/job-loss-redundancy-adobe_searchsitetablet_520X173.jpg\" srcset=\"https:\/\/cdn.ttgtmedia.com\/visuals\/German\/article\/job-loss-redundancy-adobe_searchsitetablet_520X173.jpg 960w,https:\/\/cdn.ttgtmedia.com\/visuals\/German\/article\/job-loss-redundancy-adobe.jpg 1280w\" alt ><\/p>\n<h5>Fintech makes job cuts to workforce amid falling demand<\/h5>\n<div>\n<p><img decoding=\"async\" src=\"https:\/\/cdn.ttgtmedia.com\/rms\/computerweekly\/Karl-Flinders-profile-pic-2022-140x180px.jpg\" alt=\"KarlFlinders\">\n\t\t\t\t\t\t\t\t\t<\/p>\n<p><span>By: <span>Karl\u00a0Flinders<\/span><\/span>\n\t\t\t\t\t\t\t<\/p>\n<\/div>\n<p>\t\t\t\t<\/a><\/li>\n<li><a id=\"DigDeeperItem-4\" href=\"https:\/\/www.computerweekly.com\/news\/252515539\/Zopa-bank-profitable-after-just-21-months\"><br \/>\n\t\t\t\t\t<img decoding=\"async\" src=\"https:\/\/cdn.ttgtmedia.com\/visuals\/ComputerWeekly\/Hero Images\/banking-finance-growth-2-adobe_searchsitetablet_520X173.jpg\" srcset=\"https:\/\/cdn.ttgtmedia.com\/visuals\/ComputerWeekly\/Hero%20Images\/banking-finance-growth-2-adobe_searchsitetablet_520X173.jpg 960w,https:\/\/cdn.ttgtmedia.com\/visuals\/ComputerWeekly\/Hero%20Images\/banking-finance-growth-2-adobe.jpeg 1280w\" alt ><\/p>\n<h5>Zopa bank profitable after just 21 months<\/h5>\n<div>\n<p><img decoding=\"async\" src=\"https:\/\/cdn.ttgtmedia.com\/rms\/computerweekly\/Karl-Flinders-profile-pic-2022-140x180px.jpg\" alt=\"KarlFlinders\">\n\t\t\t\t\t\t\t\t\t<\/p>\n<p><span>By: <span>Karl\u00a0Flinders<\/span><\/span>\n\t\t\t\t\t\t\t<\/p>\n<\/div>\n<p>\t\t\t\t<\/a><\/li>\n<\/ul>\n<\/section>\n<\/div>\n<p><a href=\"https:\/\/www.computerweekly.com\/news\/365535568\/Zopa-CEO-on-the-emotional-journey-to-becoming-a-bank\" class=\"button purchase\" rel=\"nofollow noopener\" target=\"_blank\">Read More<\/a><br \/>\n Samatha Kazmierczak<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Zopa Bank\u2019s CEO sees no reason why the app-based bank should not be as big as the high street giants By Karl Flinders, Chief reporter and senior editor EMEA Published: 27 Apr 2023 14:17 Zopa spent 15 years pioneering the peer-to-peer lending sector, only to drop that business to become a bank. CEO Jaidev Janardana<\/p>\n","protected":false},"author":1,"featured_media":642491,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1001,46,122092],"tags":[],"class_list":{"0":"post-642490","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-emotional","8":"category-technology","9":"category-zopas"},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts\/642490","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/comments?post=642490"}],"version-history":[{"count":0,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts\/642490\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/media\/642491"}],"wp:attachment":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/media?parent=642490"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/categories?post=642490"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/tags?post=642490"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}