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A Briefing on Zopa Filene i 3 Meeting Kansas City, MO April 20, 2006

A Briefing on Zopa Filene i 3 Meeting Kansas City, MO April 20, 2006. Today’s talk. About Zopa UK experience so far US opportunity Outlook. The big idea. We are trying to innovate in consumer finance so consumers get a better deal, safely.

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A Briefing on Zopa Filene i 3 Meeting Kansas City, MO April 20, 2006

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  1. A Briefing on ZopaFilene i3 MeetingKansas City, MOApril 20, 2006

  2. Today’s talk • About Zopa • UK experience so far • US opportunity • Outlook

  3. The big idea We are trying to innovate in consumer finance so consumers get a better deal, safely. We see innovative credit unions as our natural partners. Don’t be shy!

  4. How Zopa startedTaking fear--and cost--out of consumer finance • The world’s largest pure online bank • Immediate best-rate provider of savings accounts & mortgage loans • The world’s first online person-to-person lending exchange • Lowest-cost personal loans in the UK

  5. market average UK APR 4/15/06 5.3% A B 4.9% 7.9% 4.5% Borrowers Lenders Sorted into “markets” based on credit Pick a loan term and amount Set amount and rate each is willing to lend at in each market How Zopa works Credit screen Lenders and borrowers matched by our engine All loans diversified across 50 borrowers No subprime lending 1% fee on loan volume

  6. membership growth 70,000 60,000 9% Compounded monthly 50,000 40,000 30,000 20,000 10,000 J u l A u g S e p O c t N o v D e c J a n06 F e b M a r What Zopa members say • Our members say they’re getting a great deal • Great rates • Flexible, convenient terms • No traps, not designed to confuse • Our members say they like the community feeling • Socially rewarding: dealing directly with other people • More tangible: no faceless institutions

  7. All rates are %APR typical, 3/9/06 Source: Bank websites, Zopa UK pricing • Lenders: • Average gross return (before bad debt) of 7% • 55% higher than best savings account alternatives • Borrowers: • Lowest-cost personal loans in the UK • Members with top credit can borrow up to £25,000 for three years at 5% • No prepayment penalty

  8. Cumulative bad debt (arrears + writeoffs) was 0.05% of cumulative loan volume in January 2006. We expect future loss rates to be higher but under control nonetheless. 0.20% 0.10% Source: Zopa Apr Aug Jul May Oct Jun Feb Sep Dec Nov Jan ‘06 UK debt performance Risk controls working well to date

  9. Reception in the UK “ Alas, the banks … have an iron grip over lending to individuals in the UK, and that will never change, right? Wrong - and to prove it, I [became] a member of Zopa... “How I Opened My Own Bank” - The Motley Fool - April 06 ” “ Lending through Zopa is becoming an important part of many people's portfolio, alongside their savings and investments… “Show Me the Returns” - Alpesh Patel - March 06 ” “ This eBay-style loan exchange body has loans at a table-topping 5.3% APR. “Get the Cheapest Loan on a Plate” - The Guardian - February 06 ”

  10. target penetration by city 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% City A City B Source: Zopa Our targeted US consumersWhere our brand will reach out the most aggressively • Profile • 21-44 yrs old • College-educated • FICO > 650 • Urban and suburban • Household income > $60k • Attitudes • Banks offer self-serving complexity • Very mistrustful of financial institutions • Frequently angry • See nobody as as unbiased

  11. Returns for US investors, April 2006 Rates paid by US borrowers, April 2006 High Risk Typical Stocks B-Rated Corporate Bond Zopa rates in the US should clear at 7-8% on average. This saves borrowers money and gives investors a new asset class. Corporate Bond Fund, Lower Quality REITs A-Rated Corporate Bond Saving /MMA Treasuries (3yr) 465% 650% Low Risk CD’s 450% 800% 0% 2% 4% 6% 8% 10% 12% Sources: Mornginstar, Zopa analysis, Yahoo! Finance, Bankrate, AMEX, as of 4/4-4/7/06. Returns median rates, pretax, and net annual expenses. Sources: Bankrate (4/17/06) and Consumer Federation of America (11/040 Opportunity in the US

  12. Moving down the long tail Cumulative Population Today… Lenders who can’t lend to other people Tomorrow… Borrowers who are mispriced • New data types • Attitudes • Group membership & behavior • FICO, etc. • Analytics Credit Filtering

  13. Zopa 2.0 • Social markets: • Tenants of the Notting Hill Housing Trust • “Key workers” • Recent graduates • Affinity markets • Lenders and borrowers choose for affinity as well as financial reasons • Small business lending

  14. Integrated partnerships Tactics deployed: media (banners, text links, etc.) best buy table inclusion editorial support promotions / competitions email co-branded landing pages joint PR and surveys data sharing Partners in the UK

  15. Don’t be shy! Wade Lagrone VP Marketing, US Zopa wade@zopa.com (650) 274-9233

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