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%

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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

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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

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