Following the launch of Zopa’s first current account last month, FStech news editor Alexandra Leonards caught up with Merve Ferrero, chief strategy officer at the digital bank to explore how technology is playing a role in meeting the firm’s strategic vision, the challenges it currently faces, and how it is differentiating itself in a saturated market.

How is technology and innovation playing a role in meeting the company’s strategic vision and goals? And to what extent is the rollout of new innovation and technology a part of the bank’s wider strategy?

Technology is at the core of what we do. We have the advantage of being a digital bank, which means we started with technology, including the most advanced innovations, and that serves to benefit us.

What we do is make sure that we stay on top of the latest advancements so that when the technology moves, we move with it. This creates even better experiences for customers.
AI is of course contributing to our strategy. We started investing many years ago with machine learning. But with the development of large language models, 18 months ago we started really investing in identifying use cases, exploring how we could benefit from AI, and looking at the ways ways in which we could serve our customers with it.

At the moment, there are two things that are really starting to create outcomes for us.
One is on the customer side. We are actually creating an assistant that enables them to interact with the bank more seamlessly.

We are also exploring AI voice technology, for example, to see if customers can just talk to the bank rather than clicking on buttons.

We're also using it quite a lot on the customer service side to serve customers better. We have a chatbot, but we’re also enhancing customer agent interactions, helping them answer questions more efficiently and effectively with AI.

Another technology advancement that has contributed to our strategy is Open Banking. That’s something we started a while ago, but now that the take up has started increasing, we can see a real valuable impact on our customers’ lives. We use it in credit; we use it to confirm customer details to speed up decisions on loans; we make money movement way more seamless and easier.

While these technologies are at the core, and we keep improving them to be more resilient and flexible, we’re also staying on top of whatever the latest technology is to make sure we use it to contribute to the customer experience.

When it comes to your role as chief strategy officer, do you use AI to help with strategic decisions?

It definitely helps a lot on the research side of things, I would say. For example, it definitely makes some of the documentation more efficient. So, in terms of our own productivity – including myself and other employees – we see usage of AI. However, it could definitely be better.

I think what we are seeing is that the technology moves really quickly. At the moment, we don’t currently have a system in place where we train everyone on the use of AI, but we are changing that. We're actually creating a training hub that just focuses on AI in order to make sure we can stay on top of it to use it to its maximum.

What are some of the biggest strategic challenges you and your team are currently facing?

I think the one that comes to mind is the economy. It's been just such a roller coaster in the past couple of years, with the pandemic; cost-of-living crisis; uncertainty following a new UK government; and the election of Trump all having an impact.

I feel like it's been never-ending, and uncertainty is not good for anyone. Our business is all about consumers, so whatever impacts them impacts us.

The uncertain economic conditions mean inflation stays higher for longer, meaning that the available finances of customers are limited. It means we need to be very careful about giving out loans and making sure that they are affordable so customers can repay.

Why did Zopa decide to launch a current account? And why now?

When we first launched the bank in in 2020, we started our journey with the aim of becoming the best place for borrowing and saving. The reason why we did that is because we thought the market was where we could make the biggest impact on customers’ financial lives.

The second reason is that current accounts are an expensive product, and it is a crowded market today. Given the need is significant across borrowings and savings, we felt it would be better to start from there.

Following the success that we have achieved, with over £ 3.5 billion in loans and £5.5 billion in savings, we’ve now decided we need to bring the ecosystem together even more closely so that the customers can have a more holistic experience.

That’s why we’re doing it now. We’re nearing 1.5 million customers and having an account like this brings it all together, which is actually quite valuable.

We have a lot of different products and over a million customers who do interact with different offerings. For example, we see our credit card customers purchasing savings products, but we think that with the introduction of current accounts, we can create experiences that closely link those products. So, it’s a much deeper relationship that we can create with them.

What further growth plans do you have over the next few years?

There is tremendous growth available in the UK. With existing borrowing and savings products, there is so much more growth to be had.

Our biggest product is unsecured personal loans because that is the oldest we have, with almost five per cent market share. That gives you an idea of the growth potential of the existing business that we have, so continuing to grow our borrowings and saving business is definitely a focus.

We’ve started our transition into everyday banking with current accounts but actually has much more potential than just that. There are different products that we are evaluating that will better serve customers’ everyday banking needs. With that you can actually expand into different customer segments, which would drive further growth for us as well.

Digital banking is now a fairly saturated market, how is Zopa differentiating itself?

If you think about our heritage, and the borrowings and savings side of the business, one thing we have done is create a very sustainable company that provides a lot of value for the customer and shareholders. We've been growing profitably for two years and that’s not dependent on the current market conditions, like high interest rates, so that's sustainable profit that we generate. This means that we can give that value back to the customer in a consistent way.

I think there are a lot of firms who do an incredible job at creating seamless customer experiences. But providing value together with this is limited, and doing it for one product is extremely unique. So, I think what we have achieved is the completeness of the ecosystem.
Each and every product in itself can give you that effortless experience and the good value I think we all desire.

As a digital-only bank, is maintaining a personalised and human relationship with your customers an important part of the organisation’s strategy?

What we care a lot about is the customer. Creating products that customers love and that also give back to our shareholders, that's in our DNA.

Today that means human interaction matters a lot because I don’t see AI solving customer needs accurately, efficiently or effectively. In my experience, when I hit a block with a chatbot, it’s really frustrating. So, I don't think we create seamless customer experiences just by removing that human touch.

We do have a chatbot because there are a lot of queries that are easily solved through AI. But when you need us, we're there. I think that is one of the most prominent ways we keep that relationship. Our phone lines are not hidden. It is not impossible to figure out how to contact us.

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