Zopa, a UK-based peer-to-peer (P2P) lender, has announced plans to launch an online-only bank.

The lender said that it will apply to the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) for a banking licence.

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The application process is expected to complete in about 15 to 24 months, the lender said.

Zopa CEO Jaidev Janardana said: “The regulatory authorities in the UK have created an environment that encourages innovation, the adoption of new technologies and an increase in competition in the banking sector.

 “We are responding to the positive regulatory environment and building on our experience to bring yet more choice to the market.”

The new company plans to offer FSCS protected deposit accounts to savers and overdraft alternatives to borrowers at launch to supplement existing loans and P2P investor products.

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Launched in the UK in 2005, Zopa currently employs 187 staff in its London office. The company currently has over 63,000 lenders and has lent over £1.82bn since launch.

“Over the last 11 years we have delivered great value to borrowers and investors whilst prudently managing credit risk. Combining our pioneering data and tech-led culture with an obsession with fairness and customer experience, we are best placed to shape the future of personal finance in the UK,” Janardana added.