The document discusses a January 2009 event focused on peer-to-peer finance, particularly highlighting the role of innovation in challenging economic times. Key topics include Zopa, a social lending platform that allows direct interaction between lenders and borrowers, and the emerging concept of rotational savings and credit associations (ROSCAs). It emphasizes the potential for individuals to replace traditional financial institutions and the importance of aligning incentives to foster responsible financial behavior.

1. Wednesday January 21 st 2009 Presented by NESTA Connect & openbusiness twitter: #webank ob open business

2. Tonight is an expedition into peer-to-peer finance

3. What the role of innovation in a downturn?

4. This is a vibrant and emerging area

5. And an international one too… Table courtesy of Anthony Evans

6. Interest in alternative currencies is also note-worthy

7. Tonight we will enjoy both a showcase…

8. And a discussion & debate James Gardner, Bankervision Giles Andrews, MD Zopa UK Umair Haque, Havas Media Lab Christian Alhert, openbusiness

9. Why are we here at NESTA? NESTA Connect : experimental projects which look to break down traditional boundaries with ways of working NESTA Social Finance : developing the finance market for social enterprises NESTA Investments : venture capital funding for early stage start-up companies NESTA Policy & Research : influencing innovation policy across all sectors

10. And if you want to find them in the room: Sarah McGeehan Andrew Small Head of Social Finance Roland Harwood Director, NESTA Connect NESTA Investments Richard Braham Senior Policy Associate

11. But I’m more interested in you But I’m more interested in you flick r : Matthew Field

12. But I’m more interested in you Which organisations are in the room?

13. Dave Birch, Digital Money Forum Anthony Evans, startupexchange But I’m more interested in you We also have a wealth of P2P expertise Ryan Steele, Prodigy Finance David Morris, Bearing Point

14. So let’s get on with it ob open business

16. What is Zopa? People have described Zopa as: Like eBay for money An anti-bank A bank(!) Shopping for money online A money cooperative We refer to Zopa as a social lending platform

17. What is a social lending platform? We use technology to allow people who want to lend money, and people who want to borrow money, interact directly with each other ‘ No middlemen’: less overheads, better rates for lenders and borrowers ‘ Philanthropic’ appeal: borrowing from real people lending to those who need help Zopa doesn’t invest your money - you do Zopa stands for ‘ Z one O f P ossible A greement’

18. How does it all work ? Each individual has control and makes choices about lending and borrowing - this creates the marketplace Zopa facilitates and effects these choices in the marketplace: We ensure borrowers and lenders are reliable and trustworthy We ensure borrowers are creditworthy and of suitable risk We match lenders’ funds to borrowers’ applications We manage the administration of the loan and repayments Zopa itself does NOT appropriate your funds for its own investment

19. What happens in practice… Meet our typical lender: His name is Dave He’s 40 years old Lives in South West London Lends about £1,300 Meet our typical borrower: His name is also Dave (really!) He’s also 40 years old Lives in Birmingham Borrows about £4,300 for a car Zopa does the clever bit: Assess creditworthiness using an automated scorecard If ineligible the prospective borrower can’t apply If eligible we match lenders’ offers to the borrower Zopa further assesses the risk: Underwriters review each case on individual merits They make an informed decision based on several criteria If the application is approved the loan is disbursed

20. The challenges of a social lending platform Perception that the Zopa marketplace will be a risk-free environment ‘ Human’ / social element can foster indignation or the feeling of being cheated when a debt goes bad Providing lenders with the right amount and quality of information to make an informed decision Dissemination of knowledge (understanding how to make good use of the disposable tools) ‘ On demand’ culture: expectation of lenders and borrowers

21. Zopa miscellany £31m (over 7,000) loans disbursed since March 2005, including £12.6m (over 2,600) loans in 2008 0.2% bad debt experienced to date Uses for loans include: Car loans (over 2,500) Weddings (over 100) Surgery/Medical Expenses Supporting weird and wonderful livelihoods

22. And finally… It’s pronounced / ˈ zo p ɑ / (not / ˈ zu p ɑ / , or even / ˈ z ɒ pər/!!)

24. CAN PEOPLE REPLACE INSTITUTIONS? Rahul Verma, Co-founder

25. A VERY TIMELY QUESTION Web 2.0 Social Network phenomena Unprecedented meltdown in Banking

26. LESSONS TO BE LEARNED Organisations of the future must be fully engaged with the people they serve Incentives must align to encourage the right behaviour Society must re-adopt a healthier approach to money - savings underpinning spending, not spiraling debt

27. EXTRAORDINARY OPPORTUNITY New thinking is required Old models need revisiting People need to take back control

28. Kubera Money A perfect example of how people can replace institutions

29. BACK TO THE FUTURE ROSCAs (Rotational Savings and Credit Associations)

30. WHAT’S A ROSCA? Oldest form of micro-finance Used extensively around the world Similar to Credit Unions and Building Societies Serve those with regular income and social capital

31. COMPARISON TO OTHER LOANS ROSCAs have the ability to compete with existing personal loans £7,500 loan over 15 months ROSCA Loan 1 Loan 2 Loan 3 Credit profile ? Good Fair Poor APR ? 7.8% 17.9% 50.4% Interest paid (£) 372.92 387.25 859.00 2,258.75

32. KEY FEATURES OF A ROSCA Simple and completely transparent Provides better rates for both borrowers and savers Provides responsible and affordable credit Highly flexible, human and social Leverages pre-existing trust networks

33. kuberamoney.com will be launching soon... ROSCAs for the 21 st Century

35. “ The Foreign Exchange Revolution” Todd Veri – CEO Midpoint & Transfer Ltd [email_address]

36. The Murky World of Foreign Exchange (pi·ra·nha also pi·ra·ña) noun “ Piranhas aren't the man-eaters folklore would suggest; you're much more likely just to lose a toe” (1) (1) http://www.practicalfishkeeping.co.uk/pfk/pages/item.php?news=1180

37. Disintermediation - the removal of intermediaries in a supply chain: "cutting out the middleman” (Wikipedia) Midpoint takes Bankers and Brokers out of the equation - Saving Users £££

38. Midpoint & Transfer is Different Spread-Free Foreign Exchange Anonymous Peer to Peer Platform Free Trial Same Day Match Guarantee Flat Fee includes Funds Transfer

39. 1a) Alice in England Places Euro Order Midpoint & Transfer 1b) Bob in Ireland Places Pound Order 2) Orders Matched, Notifications and Instructions are Sent 3) Using Online Banking, Users Remit Funds (including Fees) 4) Funds Verified and Transferred to Payees’ Accounts (1-3 days) Segregated Trust Accounts Wine Supplier in France Car parts Manufacturer in Scotland Midpoint Process- Step by Step

40. Hidden Cost of Spread International Transfer Fee Receiving Fee Midpoint Flat Fee Savings £173 £124 £373 Savings £296 £10,000 Transfer £60,000 Transfer With a £30 Flat Fee - The average importer would save over £30,000 a year by using Midpoint & Transfer (1) Documented In-house Research June 2007

41. With Midpoint – Money Arrives in One Piece “ Given a Scarcity of Food – Piranhas will turn on each other” (1) (1) http://www.practicalfishkeeping.co.uk/pfk/pages/item.php?news=1180

42. Coming soon to – www. midpoint.com

43. Disintermediates Foreign Exchange No Spread – Serious Savings Disruptive, marketable, and scalable For further information: email - [email_address]

44. And a discussion & debate James Gardner, Bankervision Giles Andrews, MD Zopa UK Umair Haque, Havas Media Lab Christian Alhert, openbusiness

45. keep an eye on www.webank.org.uk blogs.nesta.org.uk/connect | openbusiness.com ob open business