British Neobank Zopa Raises $93 Million to Fuel Growth

British neobank Zopa Bank has raised 75 million pounds ($93 million) to fuel its “continuous growth and expansion.”

The company has now raised a total of 530 million pounds ($660 million) since its launch in 2020, including 150 million pounds ($187 million) raised this year, Zopa Bank said in a Friday (Sept. 8) press release emailed to PYMNTS.

The neobank now serves 1 million customers and aims to reach 5 million by 2027, according to the release. It generates annual revenue of 250 million pounds ($311 million), is operating profitably and expects to achieve full-year profitability for the first time in fiscal year 2023.

In a statement emailed to PYMNTS, a Zopa Bank spokesperson said this capital raise reflects approval of its business model, unit economics and “vision to build Britain’s best bank.”

“The new funding will allow Zopa to continue its rapid growth without diluting the equity position of its shareholders,” the statement said. “Optimizing our capital mix will also enhance the returns we achieve on equity.”

Zopa Bank has delivered credit performance that is stable and better than expected in today’s uncertain climate by using its underwriting models that are powered by artificial intelligence (AI) and machine learning (ML) algorithms that have been optimized over eight years of use, according to the press release.

The company also attributes its growth to its banking license that assures customers that it is held to the same standards as major banks, the release said. For example, its deposits are protected up to 85,000 pounds ($106,000) by the U.K.’s Financial Services Compensation Scheme (FSCS).

Zopa has also continued rolling out new products, per the release.

Recent additions include a regulated buy now, pay later (BNPL) offering, which the company promotes as a responsible alternative to those offered by other providers, and its Smart Individual Savings Account (ISA), which allows savers to keep more of their returns.

The company made headlines in February when it made its first-ever acquisition, picking up BNPL firm DivideBuy. Zopa Bank CEO Jaidev Janardana said at the time that the acquisition would bring to life a “BNPL 2.0” that is easy to use while also addressing the BNPL sector’s issues of affordability and responsible lending.

In Friday’s press release, Janardan said: “Today’s financing is a clear market validation of Zopa Bank’s financial performance, pointing to strong investor confidence in its growth and in its ability to deliver strong financial performance despite the economic uncertainty.”