Digital bank Zopa has made a key move in the growing UK market with the launch of a fixed term savings account.
The company, which began as a peer-to-peer lending platform, gained its full banking licence in June and launched it digital bank offering in the same month.
The company now plans to launch a suite of digital banking products that are designed to meet the changing needs of consumers, with the fixed term savings account being the first.
Requiring customers to deposit a minimum of £1,000, it provides an annual equivalent rate of between 1.05% for 1 year and 1.3% of 5 years, and has been launched at a time when savings rates have fallen to their lowest levels on record. It is hoped that this will attract customers as banking products – and in particular those offered by digital banks – are becoming for varied and numerous.
“Today people quite rightly want to know that their savings will deliver a return that helps them make the most of their money,” said Jaidev Janardana, CEO of Zopa.
“Launching our fixed term savings product delivers the much-needed choice and reassurance of rate that consumers are looking for.”
Zopa savings account launch comes as digital bank market continues to challenge
Zopa has launched its fixed term savings account at a time when digital bank companies are increasingly challenging the established financial industry.
Some companies, including Starling and Monzo, have rapidly grown into major names, while others have launched to cater to niche markets, including Swiss digital bank Alpian, which is designed to cater to high net-worth customers.
However, established banks have also tried to move into the space, with varying levels of success. Royal Bank of Scotland was forced to close its digital bank Bo, citing the challenging conditions the coronavirus had created. Meanwhile, Natwest’s digital bank Mettle, which is designed for small businesses and sole traders, is attracting interest.
For small companies such as Zopa, however, the digital bank environment enables the opportunity for rapid innovation in response to consumer needs.
“As a new digital bank, Zopa is using its innovative, agile approach to ensure we bring more choice and competition to people’s financial lives when they need it most,” said Janardana.
“By leveraging our significant technological and financial services expertise we are able to offer good value, straightforward products and intuitive tools to help people manage their money.”