FCA Awards P2P Lender Zopa First UK Banking License

British peer-to-peer lender Zopa announced that it has been awarded a U.K. banking license, with restrictions, from the Financial Conduct Authority (FCA).

Launched in 2005, Zopa is considered to be one of the world’s first peer-to-peer (P2P) lenders. Its digital bank offering will include a fixed-term savings product, a credit card and a money management app.

While the company’s banking license is now at a “mobilization” phase, Zopa said it would be given a full banking license after it meets conditions laid out by the FCA.

“Acquiring our banking license is the starting point for Zopa to become a major force in retail banking,” Jaidev Janardana, Zopa’s chief executive, said in a statement, according to CNBC.

The company revealed that it has lent almost £4 billion to consumers in the U.K. since its inception, with £1 billion being lent out in the last 12 months alone.

Back in July, it was reported that the FCA was taking a closer look at P2P lenders, including proposing tougher regulations for the industry as a whole.

“We believe that loan-based crowdfunding can play a valuable role in providing finance to small businesses and individuals, but it’s essential that regulation stays up to date as markets develop,” noted Christopher Woolard, executive director of strategy and competition at the FCA. “The changes we’re proposing are about ensuring sustainable development of the market and appropriate consumer protections.”

In fact, Zopa CEO Jaidev Janardana sees a regulatory structure as a step in the right direction.

“We also believe strongly in a well-regulated industry — we lobbied for years for effective regulation,” Janardana noted in a statement released at the time.  “The more that can be done to make sure all P2P organizations have these standards, the better in our opinion.”

Zopa’s banking announcement comes as the P2P industry is heating up in the U.K.  Funding Circle, the U.K.’s largest small and medium-sized business lending marketplace, has lent out $4 billion and is heading for an IPO by the end of the year. And Goldman Sachs launched its consumer bank Marcus in the U.K. in August, luring customers with the highest interest rate in the country. In November, it was reported that U.K. banks were seeing a boost in the number of customers switching over to Marcus.

“Yes, we are worried about Marcus, we have seen significant outflows from our savings products — although I question if they can keep growing at that speed,” said a senior executive at one of Britain’s biggest lenders.