Interviews

Why Zopa's CEO believes fintech trailblazers aren't there to "kill the banks"

9 min read

23 December 2015

Former editor

With a new CEO at the helm and loans to consumers now surpassing £500m during the year, peer-to-peer finance provider Zopa has much to celebrate – not least the accolade of Growing Business of the Year: Smaller Company at the 2016 Growing Business Awards.

Leading the way in the category, bestowing the UK’s most promising business turning over less than £25m, Zopa beat off competition from the likes of Gousto and Simply Waste Solutions.

To find out more, we met with the company’s new CEO – Jaidev Janardana – who has been in the job since the beginning of September.

Janardana first joined the company in October 2014 from a position as chief marketing officer at Capital One. Having worked his way up through number of positions over 12 years at the financial services company, Janardana feel the time was right for a new challenge.

“I’d spent a decade working with Capital One, and there were lots of similarities there. There was a desire and ability to use world-class analytics for making business decisions,” he explained.

Having come in as COO while Zopa founder Giles Andrews was still CEO, Janardana found himself taking on many of the traditional chief executive jobs – while Andrews focussed on specifics such as handling regulators and investors. Since being promoted at the end of the summer, he’s overseen rapid growth.

Looking back over the last 12 months, Zopa has had an impressive period. The firm has more than doubled in terms of new loans, and has achieved a similar mark for revenues. In surprising £500m in loans it blew away last year’s figure of £265m and sailed past the £1bn total historic mark.

“When I joined we were about 65-70 people, and we are now about 170. We expect to end 2016 with 180-200,” he revealed.

Growing that fast does not come without growing pains, as Janardana readily admitted. Office space has been a big one. When he joined Zopa in October 2014 it was one one floor. Nowadays it is spread across two and he revealed trying to manage office space in London is hard with five-year leases.

Bringing in the volume of new recruits Zopa has means the company and its senior management must work very hard to maintain the organisation’s culture. To do so, a more formal induction process has been created, whereby Janardana or Andrews spend time with new employees to educate on the Zopa story.

“Our methods of sourcing and methods of interviewing have changed. We now have a recruiting team, whereas before we were reliant on agencies. We still use those agencies, but it’s more about supplementing the recruiting team alongside in-house referral.”

Read about some other Growing Business Awards winners:

Illustrious peers

Looking at the wider fintech sector as a whole, Janardana believes it has had great growth and publicity during the last year and a half or so. Companies such as Zopa, Funding Circle and TransferWise he sees as leading the way, making a mark not only in term of growth but also satisfying customers.

While others have dabbled in both consumer and business lending, Zopa has stuck to its original roots of retail lending so that it has the right underwriting models and assessments.

“There are three big players today when I look at P2P. One of them is us and the second is Funding Circle, which has similar beliefs but operates in the business space so doesn’t compete.

“Then there’s RateSetter, which does a bit of both. But when I think of competition, RateSetter is only about half our size in consumer lending so I don’t worry about them. I see competition as coming from established banks.”

The conversation, Janardana believes, is shifting away from the assumption that P2P technology firms are here to kill the banks, to one which involves collaboration. While this discourse is a little more advanced in the US, he has been encouraged by the likes of Metro Bank, which is “setting a good example”.

“When you look at the banks there are three groups. Number one is those saying we could innovative but in certain other things why reinvent the wheel – let’s partner. This involves some challenge banks and others ahead in the journey like ING – which has partnered with Kabbage for small business lending.

“The second set think they can innovate but shy away from collaboration, like Barclays. The third group are not in the conversation as they have problems so solve like regulation, reputation, culture change and strategy.”

In May 2015, Zopa partnered with Metro Bank to allow the bank to lend its funds through the platform. In a “first of its kind” for the UK, Metro Bank is now helping to fund Zopa borrowers by getting a loan to finance a car, home improvement or consolidate existing debts such as credit card debt.

Speaking at the time, Metro Bank CEO Craig Donaldson said: “The partnership we have with Zopa is a cultural fit that works perfectly with our commitment to providing a convenient and consumer-focused banking experience and we look forward to working with them closely.”

Industry protection

As alternative finance businesses and major banking organisations have come together, the government and financial regulators have realised there is a need to make sure consumers are sufficiently informed and protected regarding new financial products.

“The Financial Conduct Authority (FCA) has come in at the right time, it hasn’t been a bad actor in the space. The industry lobbied for the organisation to come in as it was the right time to make sure consumer protection was in place,” Janardana explained. “We are in constant dialogue with the government and regulators.”

Janardana watched as first the Office of Fair Trading, and then the FCA, first looked at the risky industries like pay-day lending, and then moved into industries like the one Zopa operates in – building rules that should provide long-term structure and protection.

New year, new goals

Bringing it full circle to Zopa’s accomplishments, and the reason we sat down with Janardana in the first place, first and foremost the new CEO saw the Growing Business Awards recognition as “wonderful external validation”.

“It is also very helpful in attracting talent as, for the people we talk to, telling them here are those that have recognised us helps.

“Lastly, less so now but as we do more brand building, it helps create trust. We have a broad set who know us – but as we grow really exponentially, proof points are great for that.”

While Zopa was the winner in our Smaller Company category, it’s safe to say that by this time next year it may have even moved beyond the parameters of our Larger Company benchmark of a turnover between £25m and £50m. The fintech market has been bubbling away nicely in 2015, and 2016 could be the year companies like Zopa blow the lid off.