Zopa is the longest established and highly successful player in the peer-2-peer lending and borrowing marketplace.
Like other peer-2-peer lenders, Zopa is mostly funded by members of the UK public who have a bit of spare cash they want to invest. Those investments are used to provide very competitive loans to other members of the public.
Without the large overheads, branch network and staff costs of the average bank or building society, Zopa can afford to take a smaller cut of the profits from its loans. This allows Zopa to pay its investors a decent interest rate on the funds they lend to Zopa.
Typically interest rates at Zopa, your return on investment, are at least a percentage point or two better than the best high street savings accounts.