Social Lending & Traditional Lending:Social Lending & Traditional Lending:
Friends or Foes?
Virgin Brand Awareness in the US
Nationwide Awareness of Virgin Awareness by Major Market
76%Boston90%
New YorkChicago
Minneapolis83%
Toronto82%
76% San Francisco94%
Los Angeles
New York93%
g89%
“Have you heard of Virgin?”
Los Angeles93%
Miami91%
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Source: Simmons Two Year Study 2007; ABT Research Feb 06
Virgin Brand Target in the US
OPTIMISTIC CONNECTED EXPRESSIVEOPENAMBITIOUS
(214) I am an optimist
(176) I like to enjoy life,d ’t b t th f t
(325) I like to stand out in acrowd
(177) I speak my mind even if itt l
(122) It’s important to have lastingrelationships
(117) I enjoy spending time withf il
(240) I have a keen sense ofadventure
(255) I like to pursue novelty,
(209) I am a workaholic
(207) I’m work centereddon’t worry about the future
(136) I’m very happy withmy life
upsets people
(163) I’m frank, straightforward,candid, outspoken
(180) I consider myself to becreative
my family
(191) I enjoy entertaining people inmy home
(160) I like to have a close circle offriends
( ) p y,challenge and change
(207) I’m brave, courageous andadventurous
(218) I’m interested in
(201) I want to get to thevery top of my career
(176) I look at work as acareer, not just a job
creativefriends
(245) The internet is the prime ofmy entertainment
international events
(213) I’m interested in othercultures
(224) Would pay more fori t ll f i dl d t
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environmentally friendly products
Source: Simmons Two-Year Survey 2007/ Mullen Analysis
Innovations
Social Lending
• Pioneer in the U.S.; originallyCircleLending
• First to report P2P loans to creditbureaus (Experian, Transunion,PRBC)
• First to develop robust product linefor home loans, business loans,student loans and personal loansstudent loans, and personal loans
• First to distribute social lendingproducts via intermediaries (mortgagep ( g gbrokers, financial planners)
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Social Lending Market Opportunity
Peer-to-Peer Loans are Common,Mainly Among Relatives and Relationships between PartiesMainly Among Relatives andFriends:
•$89 billion in outstanding
e at o s ps bet ee a t es
ExtendedFamily9%
Other7%
•$89 billion in outstandingtransactions between “family andfriends” in the U.S.
Parent/Child39%
•72% of first-time home buyers haveaccess to funds from relatives
Siblings21%
•90% of all small business start-upsget money from informal sources such asfriends and relatives
Friends24%24%
virginmoneyus.com
Data sources: Federal Reserve Board, Survey of Consumer Finances, 2004; Monitor Company surveyof 400 individuals in 4 states; Proprietary research; Global Entrepreneurship Monitor.
Growth
• Two Customers for the Price of One
• Deep customer relationships for multi-• Deep customer relationships for multiyears (90%+Willingness to Refer /Cross-Sell)
• Highly engaged client base
• Above-average credit scores
FICO Score Distribution
21.2% 20.2%25.0%
1.0%6.0% 6.0%
9.1% 7.0%
13.7% 15.8%
0.0%5.0%10.0%15.0%20.0%
300-349 350-399 400-449. 450-499 500-549 550-599 600-649 650-699 700-749 750-799 800-850
Virgin Money National Average
virginmoneyus.com
Home Loans
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Student Loans, Business Loans, Personal Loans
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Sample “Coupled” Products with Banks
Student Loans Percent of Site Visitors by Income Bracket
• Parent borrows, student repays in aflexible manner, family saves money
33%22%
80%90%100%
Mortgages
• Borrower gets affordable secondmortgage and gets to deduct interest
21%28%
50%60%70%80%
g g g
• Private investor in the first mortgagegets superior quality client with asocial anchor for repayment 25%
21% 28%
20%30%40%
social anchor for repayment
Business Loans / Cards
l f l f
25% 22%
0%10%
P2P Traditional MortgageProviders
• Start-up loan from F&F, pre-qualifyfor Virgin Money loan from bank <$30K $30-60K $60-100K $100K+
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Oh Behave!Loan Servicing ProtocolsLoan Servicing Protocols
Flexibility and Structure
• Spread out missed payments
M t t d f l• Move payments to end of loan
• Grace periods before first payment
• Portable Piggyback
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Predicting the Future
Analyst forecasts are optimistic
•Projections range from $1.3B to $5.8Bby 2011 – this is growth from $300M in
US Peer-to-Peer Loan Originations (in Billions)
$
$7.00
2007
•Gartner predicts that by 2010, social $4.00
$5.00
$6.00
Gartner predicts that by 2010, socialbanking platforms will have captured10% of the available market for retaillending $1 00
$2.00
$3.00
g
$0.00
$1.00
2007 2008 2009 2010 2011 2012
Celent Javelin OBRCelent Javelin OBR
virginmoneyus.com
virginmoneyus.com