Social Lending: Where did it come from, where is it going?James AlexanderFriday 30th November 2007

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

TECHNOLOGYREVOLUTION

INSTALLATION DEPLOYMENTERUPTION FRENZY GOLDEN AGE MATURITY

TurningPoint

2nd Age of Steam& Railways 1836Railway

mania1829Revolutions1848

Panic1847 1857 1866 1873

3rd Age of Steel, Electricity& Heavy Engineering The “Great

Depression”1875

1890Argentina(Baring)

USA1893

1903USA

“Rich man’spanic”

1907 1920

4th Age of Oil, Automobiles& Mass Production 1930s

andWWII

1908 1920*1929

USA stockmania

1960 1974“Oil crisis”

Source: Carlota Perez ‘Technological Revolutions and Financial Capital – the Dynamics of Bubbles and Golden Ages’

Canalmania1793

1st ‘IndustrialRevolution’ 1771

18101819

1825Panic1797

5th Age of Information& Telecommunications ? 20??1971 1974*

“Oil crisis”

1987

1989Collapse2nd World

1997Asia

2000NASDAQ

2005eBay

2000 2005 2010

TECHNOLOGYREVOLUTION

INSTALLATION DEPLOYMENTERUPTION FRENZY GOLDEN AGE MATURITY

TurningPoint

5th Age of Information& Telecommunications ? 20??1971 1974*

“Oil crisis”

1987

1989Collapse2nd World

1997Asia

2000NASDAQ

2005eBay

P2P Lending

?

?

?

?P2P Trading

P2P Payments

PersonalisedSearch

P2P Voice P2P Video

P2P Info

P2P Social

P2P Photos

iTunes for music …

Freeform companies, enabled by technology are transforming industries

eBay for things … Zopa for money

Social Networks

The online marketplace where people meet to lend and borrow moneyWith no bank in the middle, both parties get better rates

Lenders• Great Returns

• It’s human

• It’s safe

• You’re in control

Borrowers• Low, low rates

• No banks

• It’s fair

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

• Just launched in Italy

• Imminent launch in US

Control, community, transparency and ethicality key for value and trust

Opennessis highlyvalued

Users feel valued

and committed

Users become

championsof Zopa

“No other financial site that I have visited has the guts to run a discussion board and take it on the chin.

That makes me feel like I am part of a community and seems to trigger a sense of belonging. With belonging comes pride and passion.

When I tell my friends about Zopa I feel hurt by any negative comments they make as though the site was my own, and for that reason it gets me all wound up when I see even the tiniest glitches on the site”

Mosshill, Zopa lender (Oct 18 2006, 09:17 AM)

An evolving modelMore involving, more viral

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?