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Launched in early 2005, Zopa is a peer-to-peer online brokerage that couples British residents who want to lend with those who want to borrow. The company represents a new business model in the retail financial services industry, and since Zopa is not technically a bank and does not lend money itself, the capital requirements to run the business are relatively small. Compared to a traditional full service bank Zopa concentrates on only a few steps of the value chain. This case study provides an overview of how Zopa, a value innovator, has developed a unique position in the market through an innovative business model. This case enables students to develop a good understanding of the elements of a value innovation and how technologies have the potential to shake up an established industry structure and its key players. Students also get to discuss the sustainability of competitive advantage in a business in which network effects play an important role. Finally, the case can be used to address the topic of how incumbent firms should respond to innovative new business models.

The case helps students to develop a deeper understanding of the concepts of positioning, value innovation, sustainable competitive advantage, and responding to new market entrants. It is intended for MBA courses in strategic management, innovation, and marketing and can also be used in executive education programs as part of a competitive strategy program to discuss issues related to positioning, value innovation, and sustainable competitive advantage. The case is especially suitable for financial services managers in traditional retail or online banking facing the threat of market entry by low-cost or more focused firms.