App-based Zopa bank buys BNPL fintech

Zopa bank has acquired fintech DivideBuy, in what it described as a move into buy now, pay later (BNPL) 2.0 financial services.

The acquisition comes soon after Zopa announced a new round of funding worth £75m.

BNPL products are offered by an increasing number of fintech providers – Klarna being one of the biggest – giving consumers the opportunity to spread the payments of a huge range of purchases. It accounted for 12% of a total £8bn spent online in the UK last month, according to Adobe Analytics, with BNPL accounting for 10.7% more than it did in January 2022.

Zopa, which began life as a peer-to-peer lender before becoming a digital bank, said its acquisition of DivideBuy will bring easy-to-use BNPL products alongside responsible lending, seen as critical as the regulators plan to clamp down on the sector.

In response to concerns over consumers’ financial welfare, the government has proposed to regulate previously unregulated BNPL providers.

Jaidev Janardana, CEO at Zopa, said the acquisition will address “some of the issues around affordability and responsible lending which have plagued the sector”.  

“We are proud to be entering the point of sale (POS) space with DivideBuy, a market-leader with a standout product and technology stack, and a culture that is closely aligned to our values of fairness and customer centricity. Combining DivideBuy’s POS financing solution with Zopa’s best-in-class underwriting capabilities, regulatory permissions, and access to funding will enable digital-first journeys that bring new value to merchants and consistently delight customers.”

This will be Zopa’s first acquisition, and is a further sign of the company’s ability to quickly adapt to new market opportunities.

Robert Flowers, CEO at DivideBuy, said: “This deal with Zopa will bolster our current product suite to help us take POS finance further, faster – with ethical lending at the core. This approach will ensure we meet upcoming regulation head-on to deliver a BNPL 2.0 that’s better for everyone.”

He said the company’s takeover by Zopa will provide career opportunities for its staff. “We’re particularly excited for our people,” said Flowers. “Zopa and DivideBuy share a strong, people-focused culture, and we’re committed to empowering our collective teams with new upskilling and career opportunities. We look forward to the next chapter of growth as part of the Zopa Group.”

The bank is the result of a major relaunch to take advantage of new opportunities. It emerged from peer-to-peer lending pioneer Zopa, after the company announced its plans to become a bank in 2016, and closed its peer-to-peer lending business in December 2021 to focus on its digital bank offering.

Initially, Zopa has concentrated on the savings market, offering an account that can be set up in seven minutes, with its banking services available on the Zopa app, which was launched in 2018.

Since launching in 2020, customers of the bank have made £3bn in deposits and it has issued about 400,000 credit cards.

All the technology used by Zopa has previously been built in-house, which enables it to change things based on user feedback. The latest acquisition sees it acquire external technology to integrate.

Fintech entrepreneur Matthias Kroener, who set up early digital bank Fido, said Zopa's approach to adding services after taking time to build the core is a good way to build long term. "It makes sense to have a lot of time for your strategic development. The added component by component in a very patient way, no hurry, always doing it when it makes sense. Now, in the rays of raising interest rates, it of course makes sense to add deposits, then also enlarging your loan business though I am not a big fan of BNPL solutions. But, all in all, it looks like a very reasonable development of a digital asset and liability management."