A Briefing on Zopa Filene i3 MeetingKansas City, MOApril 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.

We see innovative credit unions as our natural partners.

Don’t be shy!

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

How Zopa works

BorrowersLenders

Lenders and borrowers matched by our engineAll loans diversified across 50 borrowers

No subprime lending1% fee on loan volume

A

B

market

Sorted into “markets” based on credit

Pick a loan term and amount

4.9%

7.9%

average UK APR 4/15/06

4.5%

5.3%

Set amount and rate each is willing to lend at in each market

Credit screen

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

70,000

60,000

10,000

50,000

40,000

30,000

20,000

membership growth

Jul Aug Sep Oct Nov Dec Jan06 Feb Mar

9%

Compounded monthly

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

All rates are %APR typical, 3/9/06Source: Bank websites, Zopa

UK debt performance Risk controls working well to date

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.

0.10%

0.20%

AprM

ay Jun

Jul

AugSep Oct

NovDec

Jan ‘0

6Feb

Source: Zopa

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

“

“

“

”

”

”

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

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0% target penetration by city

Source: ZopaCity A City B

Opportunity in the US

0% 2% 4% 6% 8% 10% 12%

Returns for US investors, April 2006

Treasuries (3yr)Low Risk

Saving /MMA

High Risk

A-Rated Corporate Bond

CD’s

Stocks

B-Rated Corporate Bond

Corporate Bond Fund, Lower Quality

REITs

Sources: Mornginstar, Zopa analysis, Yahoo! Finance, Bankrate, AMEX, as of 4/4-4/7/06. Returns median rates, pretax, and net annual expenses.

Rates paid by US borrowers, April 2006

4.7%

3.9%

6.5%

6.7%

6.4%

7.2%

11.0%

26%

11.0%

18.4%

11.5%

9.6%

9.1%

20.0%

21.0%

32%

0% 5% 10% 15% 20% 25% 30% 35% 40%

Student Loan (Alltypes)

CU Auto Loan,Used Car (3yr)

Auto Loan, UsedCar (3yr)

HELOC ($30k,FICO>660,

Normal LTV)

Home Equity Loan($30k)

Credit Card (Fixedstandard)

Personal Loan

Payday Loan(2wk, $500)

Annual Rate (Before Fees)

450% 800%

465% 650%

Sources: Bankrate (4/17/06) and Consumer Federation of America (11/040

Typical

Zopa rates in the US should clear at 7-8% on average.

This saves borrowers money and gives investors a new asset class.

Moving down the long tail

Today…

Tomorrow…

Lenders who can’t lend to other people

Borrowers who are mispriced

– FICO, etc.– Analytics

– New data types– Attitudes – Group membership & behavior

Credit Filtering

Cumulative Population

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

Partners in the UK

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

Don’t be shy!

Wade LagroneVP Marketing, USZopawade@zopa.com(650) 274-9233