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?