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Zopa defies downbeat market: The digital bank continues to successfully attract interest from investors despite a wider slowdown in funding for fintechs this year.

  • Much of this can be explained by Zopa’s successful transition into mainstream banking and its quick rollout of new products. It now offers credit cards, loans, and buy now, pay later (BNPL). And its interest rates for savings accounts are among the highest in the UK market.
  • Zopa’s reported desire to go public also goes against a wider trend among fintech firms. Research from CB Insights shows that fintechs are staying private for longer, put off by market turmoil and subdued interest in tech stocks. With this in mind, taking the company public will be a risk and may indicate the neobank is in a rush to raise more cash.
  • Given the gloomy economic outlook, neobanks looking for financial backing to fuel growth might be better off delaying IPOs and seeing what happens to public markets.

Analyst’s take: “Zopa has claimed it has turned a profit, albeit a small one, under £1 million. Although it’s one of few neobanks that can claim that fame, achieving sustainable profitability will be its next challenge,” says Insider Intelligence principal analyst Tiffani Montez.

“Going after more investment in this environment will be expensive and will only stretch its runway toward sustainable profitability so far. Unless it can generate more significant, sustainable profitability, an IPO in this environment will be risky.”

This article originally appeared in Insider Intelligence’s Banking Innovation Briefing—a daily recap of top stories reshaping the banking industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.

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