The funding round values Zopa at around 750 million pounds ($1.03 billion), a source familiar with the details of the transaction told Reuters.
"SoftBank identified us as the clear leader when it comes to digital consumer lending in the UK, and they are also big believers in the use of AI and machine learning for lending and pricing, which we have been doing for years," Chief Executive Jainav Janardana told Reuters.
The cash injection via SoftBank Group's Vision Fund 2 is the latest in a string of investments into British financial technology firms by the Japanese conglomerate.
It also holds stakes in OakNorth, which lends to small businesses, and digital banking app Revolut which in July rocketed to a $33 billion valuation after an $800 million funding round led by SoftBank.
Zopa's new valuation marks a significant turnaround since media reports in December 2019 estimated it at 354 million pounds, after one of its investors wrote down its stake in the lender amid struggles for the peer-to-peer lending sector where Zopa originated.
The funding round puts Zopa on track for a long-mooted initial public offering in London as soon as the fourth quarter of next year, Janardana said.
Zopa also aims within the next year to expand into the booming "Buy Now, Pay Later" sector in Britain, he said, joining other lenders pouring into the credit product which lets shoppers defer payments for goods such as clothes and electronics.
The deal on Tuesday was announced as part of a summit in London attended by Prime Minister Boris Johnson, top financiers, industry leaders and British royals and aimed at drumming up investment in the country.
($1 = 0.7276 pounds)
(Reporting by Lawrence White, editing by Ed Osmond)
By Lawrence White