James Alexander, CEO, Zopa

Social Lending: Where did it come from, where is it going? James Alexander Monday 4th February 2008

Consumers are changing “… The consumer revolution of the last 30 years is giving way to the Freeform Revolution of the next 30 …”

We have been here before Turning TECHNOLOGY INSTALLATION Point DEPLOYMENT REVOLUTION ERUPTION FRENZY GOLDEN AGE MATURITY 1st ‘Industrial Revolution’ Canal Panic 1797 1825 1771 mania 1819 1793 1810 Panic 2nd Age of Steam & Railways Railway 1836 mania 1847 1866 1873 1829 1857 Revolutions 1848 Age of Steel, Electricity 1890 3rd & Heavy Engineering The “Great Argentina 1903 USA 1920 1875 Depression” (Baring) 1907 USA “Rich man’s 1893 panic” 4th Age of Oil, Automobiles & Mass Production 1929 USA stock 1930s 1974 1920* and 1960 1908 mania “Oil crisis” WWII 1987 1997 5th Age of Information & Telecommunications Asia 2005 1974* 1971 “Oil crisis” 1989 Collapse 2000 ? eBay 20?? 2nd World NASDAQ Source: Carlota Perez ‘Technological Revolutions and Financial Capital – the Dynamics of Bubbles and Golden Ages’

Freeform companies, enabled by technology are transforming industries Turning TECHNOLOGY INSTALLATION Point DEPLOYMENT REVOLUTION ERUPTION FRENZY GOLDEN AGE MATURITY 1987 1997 5th Age of Information & Telecommunications Asia 2005 1974* 1971 “Oil crisis” 1989 Collapse 2000 ? eBay 20?? 2nd World NASDAQ 2000 2005 2010 P2P Payments P2P Voice P2P Video ? ? P2P Trading P2P Social Social Networks ? ? Personalised P2P Lending Search P2P Info P2P Photos eBay for things … iTunes for music … Zopa for money

The online marketplace where people meet to lend and borrow money With no bank in the middle, both parties get better rates Borrowers Lenders • Low, low rates • Great Returns • No banks • It’s human • It’s fair • It’s safe • You’re in control Lenders receiving a c.30% better return than base rate; Borrowers borrowing c.30% below the market

Financial return and social reward Working, differentiated, compelling • Launched in the UK March 2005 • >180,000 members • Borrowers getting the cheapest loans in the country • Lender returns 7-11% • <0.2% defaults • Launched in the US • Launched in Italy

Control, community, transparency and ethicality key for value and trust Openness “No other financial site that I have visited is highly has the guts to run a discussion board valued and take it on the chin. That makes me feel like I am part of a Users feel community and seems to trigger a sense of valued belonging. With belonging comes pride and and passion. committed When I tell my friends about Zopa I feel hurt Users by any negative comments they make as become though the site was my own, and for that champions reason it gets me all wound up when I see of Zopa even the tiniest glitches on the site” Mosshill, Zopa lender (Oct 18 2006, 09:17 AM)

An evolving model More involving, more viral

An evolving model A derivative in the US

Social Lending is already global Expect proliferation, niches developing, consolidation

Parting challenges • What new opportunities can you see to serve Freeformers? • How will you provide an experience that embraces • Community? • Transparency? • Control? • Ethicality? • How will you take your brand into a consumers life and give up demanding they hold a relationship with you?

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James Alexander, CEO, Zopa

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