Message from the CEO, Nina Schindler
This newsletter edition is dedicated to the 60th Anniversary of the Korean credit cooperative Saemaul Geumgo (MG), the organisation of Korean Community Credit Cooperatives. A remarkable success story of cooperative banking to the benefit of members, communities, and regions in Korea.
Drawing from the principles of mutual help from Korean villages, Saemaul Geumgo first embarked on a mission to rebuild the nation in the aftermaths of the Korean National War. With the support of its apex organisation, the Korean Federation of Community Credit Cooperatives (KFCC), guiding and supervising the bank's management, they set up a wide range of financial measures and support programs - including the promotion of Environmental, Social, and Governance (ESG) factors in small and medium enterprises (SMEs) or financial inclusion schemes, especially for lower-income groups of society. Fast-forward sixty years, Saemaul Geumgo is now a backbone of the economy in Korea, with a network of more than 1200 local cooperatives covering the entire country, with 8 million members and 22 million customers.
Undoubtedly, KFCC and SG have planted the seeds for sustainable economic growth and cohesive social life in Korea. Now, they are actively assisting others in replicating their success.
With its core mission to promote the cooperative differences, to raise awareness among regulators and legislators around the world of their specific impact value and to ensure that the cooperative banking model is properly reflected in upcoming standards and regulation, the European Association of Co-operative Banks (EACB) is proud to have KFFC/ Saemaul Geumgo amongst its members, as they are certainly key enablers of this mission and its success. It is our honour to act on the international stage alongside KFCC Saemaul Geumgo as they continue to script new chapters in their prosperous journey while adhering to their roots and principles.
3 Questions to Mr Park Cha Hoon, President & Chairperson, Korean Federation of Community Credit Cooperatives (KFCC)
Mr Park Cha Hoon is the President and Chairperson of the Korean Federation of Community Credit Cooperatives (KFCC). Before his current position, he served as President of the Council of Korean Cooperatives in 2020, as President of the Zelkova Welfare Foundation from 2010 to 2016, as President of Ulsan-Gyongnam HQ of KFCC from 2002 to 2006, and as President of DONGULSAN Saemaul Geumgo for over 20 years until 2018. In the years prior, Mr Park was Vice-Chairperson of the first half of the second Ulsan Dong-gu Council.
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- You recently celebrated the 60th Anniversary of Saemaul Geumgo. Your journey is definitely a story of success. What do you consider as your major achievements? Could you explain the reasons for your success?
It has been more than a half century since Saemaul Geumgo took root based on the indigenous capital purely accumulated by the Korean people in 1963. It can be said that Saemaul Geumgo has reached its middle age, compared to human life.
I believe that Saemaul Geumgo could be built on the solid rock thanks to the devotion and endeavor of people in the local community.
In 1997, when Korea was hit hard by the unprecedented financial crisis, having no choice but to ask for bailout from the International Monetary Fund, Saemaul Geumgo was recognized as a stable and strong financial cooperative as it overcame the crisis without any financial support from the government fund.
A long while ago, when I served as a member of the local council, I contemplated the role of finance for the community. In this sense, I considered Saemaul Geumgo very special as it has promoted the most important values as a financial institution: Trust, Proximity, Solidarity and Social Commitment.
Saemaul Geumgo started with a small amount of capital collected by Korean people and provided loan services at a low interest rate and returned its surplus in the form of dividend to the members. Saemaul Geumgo has preserved its identity as a financial cooperative for the community until today.
I am so proud that 3,200 Saemaul Geumgo branches nationwide have served the vulnerable in society, shared joys and sorrows with our neighbours and contributed to growth of local communities.
For the last 60 years, Saemal Geumgo has been a shelter opened to everyone with a low threshold. In addition, it has shared its fruits of growth with customers and put cooperative values into practice, a work that is not easy for a commercial bank.
- What are your visions for the future? Where do you see the role of KFCC and Saemaul Geumgo in Korea of tomorrow?
Above all, I believe that the most important value is ‘to provide financial services conveniently, staying close to all customers’.
For me, taking care of the elderly who were the key drivers of our growth is as important as building an advanced non-face-to-face digital financial environment, in order to ensure senior citizens are not left behind in the digital era.
In particular, Saemaul Geumgo will take the lead in reaching out to rural areas that have little access to financial services. To this end, I will establish a strong cooperation system by expanding the network between Saemaul Geumgos in the cities and those in the rural areas.
I will not be complacent with the quantitative result of KRW 290 trillion but will achieve qualitative growth by walking the right path based on the Saemaul Geumgo spirit.
Korean Federation of Community Credit Cooperatives (KFCC) will strategically scale up ESG management in order to deliver more values to the members and communities, solidify our own identity and secure a competitive advantage.
KFCC will also provide more practical and financial values to all Saemaul Geumgos. We will upgrade our system to monitor, support and manage Saemaul Geumgos with a well-structured process.
There is a growing demand for the change in the way we work from instinct or experience-based to data-based. KFCC will establish a system for execution of tasks and decision-making based on data analysis and develop capability in the IT system to preemptively get ready for the future.
The visions of KFCC for the next 100 years are to ensure mutual growth with the community and to provide more support to the vulnerable in society as well as small business owners. Saemaul Geumgos will shine a bright light on the marginalized communities serving as a lighthouse in our society. KFCC will grow into the largest social cooperative group that leads the mutual growth of Saemaul Geumgo, members and the community by realizing the cooperative values.
- You are currently undertaking an International Development Cooperative Project in countries like Uganda, Laos, Cambodia and Fiji. How is this project contributing to financial inclusion in rural communities internationally?
Saemaul Geumgo international development cooperation projects are ‘global social contribution activities’ that share know-how of Saemaul Geumgo, a successful cooperative model in Korea.
The projects aim to spread Saemaul Geumgo model in developing countries to foster frugality and the habit of saving so that the people can accumulate capital for development of their communities, ultimately contributing to poverty reduction and income growth.
Starting from the first Saemaul Geumgo in Myanmar in 2017, a total of 56 Saemaul Geumgos have been established in 3 countries including Uganda and Lao PDR and about 15,000 members have achieved KRW 1.4 billion of savings. The financial inclusion model of Saemaul Geumgo is definitely helping developing countries reduce poverty and increase income.
The contribution to the international society was selected as an excellent case of Korean ODA being recognized by the government of the Republic of Korea, and received a Presidential Citation from the government to celebrate Development Cooperation Day in 2021. The projects were also presented as a best practice of ODA at various forums and symposiums hosted by the UN in 2019.
Beyond Myanmar, Laos and Uganda, KFCC is preparing for the spread of the Saemaul Geumgo financial inclusion model to Fiji and Cambodia, and the scope of project will be expanded to Latin America this year, and to Central Asia and North Africa in the near future.
KFCC will keep contributing to achievement of UN SDGs including poverty reduction, economic and social empowerment of women not only by enhancing financial inclusion in developing countries but also by raising agricultural productivity of Saemaul Geumgo members in each country and boosting income-generating projects.
Second Opinion from Berry MARTTIN, President, EACB & Member of the Managing Board, Rabobank
Berry Marttin is member of the Managing Board of Rabobank and President of the European Association of Co-operative Banks (EACB). Over the course of his career, he has gained extensive experience in both wholesale and retail banking holding various senior executive positions internationally.
From 2009 onward, he joined the Managing Board with a special focus on Rabobank's international rural banking activities and further responsibilities. Outside Rabobank, he serves as a Member of the Supervisory Board of IDH (Sustainable Trade Initiative), Member of the Supervisory Board of ARISE and Member of the Board of EACB.
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I extend heartfelt congratulations to Saemaul Geumgo and the Korean Federation of Community Credit Cooperatives (KFCC) on their extraordinary cooperative journey spanning six decades. I am confident that their success will endure and thrive for another century to come.
Saemaul Geumgo and KFCC have certainly shown the transformative power of collaboration over the course of sixty years. With a central institution pumping the water and the cooperative banking group watering the seeds, millions of customers and members can now reap the fruits of their work – better quality of life and improved wealth.
Since the bank's establishment in 1963, Korea's GDP per capita has seen an over 20-fold increase starting from $146 and leaping to a whopping $34,998 per capita in only six decades. An impressive development in which the Community Credit Cooperatives of Saemaul Geumgo has in many ways contributed to. They made it their distinct mission to include rural areas and communities every step of the way.
Saemaul Geumgo shows the ample impact potential of cooperative banking through a range of financial measures, support programs, financial inclusion efforts, as well as social, cultural, and welfare initiatives. The collaboration of the local credit cooperatives with KFCC has solidified into a cooperative structure intrinsically connected to the needs of regions and communities. Allowing them to prioritise Green MG activities to promote sustainable growth, comply with government policies for a green economy transition, and contribute to social coherence and life in Korea.
As Saemaul Geumgo and the KFCC extended their networks, the impact of their financial initiatives has continued to resonate at a local level. Their remarkable ability to maintain proximity to the realities of local life has been instrumental in their success. In this regard, please grant me a moment to acknowledge the pivotal role played by central bodies like the KFCC. They provide, on the one hand, the necessary guidance, management, and access to liquidity to fulfil cooperative banks' potential empowering regions, and on the other, a birds-eye perspective that helps stir the cooperative network group in the right flight path. This way, cooperative banks across the globe can harness their capabilities by leveraging well-established and interconnected branch-central networks.
The modern world is changing rapidly and steadily. As key drivers of sustainable economic transformation in rural and low-income settings, cooperative banks must ensure that the transitions to sustainability and digitalisation do not leave anyone behind. The international cooperation projects being developed by KFCC are surely a fitting example of how we can extend the cooperative mission and model not just to rural areas, but also to neighbouring countries and continents.
As Saemaul Geumgo and KFCC are doing in Korea, also cooperative banks in Europe are pushing ahead the sustainable transition for clients, members, and communities. Member banks of the EACB are engaged in a wide range of initiatives, from the provision of sustainable investment advice, supporting the new generations of farmers, or promoting the Environmental, Social, and Governance (ESG) management for small and medium-sized enterprises.
In response to digitalisation, cooperative banks are financing SME's digital transformation, while also modernising their own IT infrastructure (including website or applications) to better support clients. Casting a view on the future of retail banking, cooperative banks are also developing flexible multi-channel distribution strategies to offer financial services at maximum convenience. The distinctive social impact of cooperative banks is possible because although mindful of the global agenda, cooperative banks stay connected to regions, enabling them to respond swiftly to the fast-evolving needs of customers. Our proximity to customers is certainly a key enabler of our success.
Leveraging cooperative banks' both branch, and central structures, local and global capacities, we stand ready to face the challenges that lie ahead. In view of the future, the strong partnership with our fellow Korean counterparts fills us with confidence as we work together to uphold cooperative values and champion the cooperative business model on both European and international stages. And even if a rainy day clouds our vision, we shall be guided by the shining example of KFCC and Saemaul Geumgo to continue advancing the cooperative mission.