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The road to three new lender products

The launch of our new lender products is now just around the corner. In this blog I wanted to share some of the work that our lender team has been doing to make it all possible and explain what we plan to do next as we continue to iterate and improve on our new products.

Understanding what our lenders want

Every month we ask at least 1,000 of our lenders to score how likely they would be to recommend Zopa to a friend on a scale from 0 – 10. This allows us to calculate a Net Promoter Score, a standardised measure of customer satisfaction that we track over time.

When analysing the results of these monthly surveys, we noticed a trend that people scoring Zopa a 7 or less thought the product didn’t fit their needs or they were dissatisfied with the lending rates. Their main issues were that the product didn’t offer enough choice and they didn’t like the costs associated with selling their loans early.

In addition to asking customers directly, we also spend a lot of time talking to our customer services team who explained the most common questions and concerns of our lenders.

They said the most difficult thing to explain is how access works to our new lenders:

“…The hardest thing to explain to a lender is when does my term end? They look at loan terms and assume that ties to the investment term …”

While we were happy with the performance of the loans that we offered our lenders, we realised that the way that they were packaged did not reflect our lenders’ needs.

Rather than try and fit the existing products to meet the needs of our current and future lenders, we decided to develop an entirely new generation of Zopa lender products.

Creating a new generation of lending products

Our journey to the three new products has been paved by research, customer interviews and a significant amount of testing to understand what our customers want from the lender products. Here’s what we learnt along the way …

Rates

Lenders often question why we don’t offer higher rates. Historically, Zopa only lent to individual borrowers graded A*-C. Today, interest rates associated with borrowing are at record lows and it is a constant juggling act to balance risk whilst providing attractive rates for our lenders. We have been testing higher risk markets with institutions for the last two years and now by opening up these markets to retail customers we can offer higher projected returns, after higher expected default rates. Zopa only lends to sensible borrowers who are able to afford a loan and we are confident in our risk management policy.

Product fit

Some of our earlier lenders told us that they don’t like Safeguard and want more choice when it comes to risk. Others complained that they felt their money was too tied up and were confused by how loan terms were related to access, particularly as many borrowers pay their loans back early.

From this initial feedback we decided we needed to offer products with more choice around risk and return, as well as a clearer definition of access.

User research

We set up a number of exploratory discussions with our existing lenders to understand how they think of the money that they put into Zopa vs. other financial products. We also tested the trade-offs that they make between access, risk and return in order to analyse how the different features might fit together. We asked these questions in the context of our existing product offering to see where the gaps were in what we provided our customers today.

Defining product features

The team then used these discussions to agree on the basic product features which fitted into three broad categories. Next we tested our three hypothetical products through a number of one-to-one interviews with non-Zopa customers – both those who had similar characteristics to our current customer base as well as people who were new to the idea but who might be potential customers in the future.

We used a number of card sorting exercises where users were asked to position the three (unnamed) products in terms of their existing financial portfolio. We first asked them to look at the three options as generic investment products. This helped us to understand people’s financial attitudes without biasing them to peer -to- peer lending. We then showed them the products once we had introduced the concept of peer- to- peer lending to see how this influenced the way that they thought about these products.

It was these interviews that confirmed that users considered Zopa Access as “an alternative to a short term savings product” and the Zopa Plus product as “an alternative to a stocks and shares product”. We invited people from different parts of Zopa to join these interviews so that we could all better understand the customer perspective. We then held a number of follow up workshops to share our findings to ensure that we captured everyone’s feedback. Using the products

Once the team was confident with the basic product features, we started to test how users would interact with the products. Our online testing methods tracked how users sign up and navigate their way through ‘My Zopa’. We used heat maps to show how users behaved when asked to complete specific tasks, which helped us to test lender understanding of our products and choices they needed to make.

Delivering the new products

We made the decision to launch our new products to lenders ahead of the introduction of the Innovative Finance ISA to make sure that lenders had the opportunity to try them out before deciding whether to open an ISA. It didn’t seem right to launch ISAs and then completely re-vamp our products straight after! As a result we have had to be disciplined when it came to prioritising product features.

Our regular catch- ups with customer services have helped us to work out what matters most to lenders when building these products. For example – we know that automatic re-lending across products is a high priority feature for our team to deliver shortly after the new products launch.

Now that the products are nearly ready to go live, the entire Zopa team is excited to deliver Zopa Access, Zopa Classic and Zopa Plus, our new and improved offering – and to hear feedback from both our current and future customers.

What next?

We are currently full steam ahead to get the first version of the new products out to our lenders, however this is only the beginning… Over the coming weeks and months we will continue to iterate and improve on the new products and roll out new functionality and features as and when they are ready for you to try out.

As always, we would appreciate and welcome your feedback on this journey to transform our lending product. Either email our user testing group at usertesting@zopa.com or give our customer services team a call. We look forward to hearing your thoughts!