[Asia Exclusive] Financial Innovation of ShinHyup... "Necessary but Must Not Undermine Cooperative Values"

Shinhyup Emphasizes 'Cooperative' Over Financial Institution
"Even Farmers Should Be Able to Visit Conveniently"
Expanding Local Win-Win Services as a Differentiation Strategy

Kim Yoon-sik, Chairman of the National Credit Union Federation of Korea, is conducting an interview with Asia Economy on the 25th. Photo by Kang Jin-hyung

[Interview by Reporter Kwangho Lee, Summary by Reporter Seungseop Song] "Earlier this year, an elderly gentleman came to the cooperative asking to borrow just 3 million won. He said life was tough and he wanted to buy a rear car to sell roasted sweet potatoes. Although the risk of default is high, credit unions must be able to lend funds to such people. Innovation is important, but the cooperative’s primary mission is to help struggling ordinary citizens."

From non-face-to-face and digital transformation to ESG (Environmental, Social, and Governance) management, credit unions belonging to the mutual finance sector cannot escape the massive wave of financial innovation. Kim Yoonsik, Chairman of the National Credit Union Federation of Korea, emphasized the long-term strategy unique to credit unions while stressing their identity as ‘a cooperative before being a financial institution.’ The intention is to pursue innovation without compromising the values that cooperatives must uphold.

When asked about the credit union’s digital strategy, Chairman Kim said, "To strengthen non-face-to-face competitiveness, we launched the mobile integrated platform ‘OnBank’ and became the first in the mutual finance sector to allow member registration through it. We have also established an advisory department staffed with IT and financial experts who have worked over 30 years in various financial institutions to enhance our digital competitiveness."

However, he noted, "As digitalization accelerates, the number of non-face-to-face customers has increased, and some banks are reducing branches for profitability reasons. Since credit unions advocate community-based finance, it is difficult to close branches purely based on profit logic." Although this may seem contrary to digital innovation, the explanation is that branches have been expanded to fill financial gaps. In fact, credit unions slightly increased their branches by 19 at the end of last year.

Differentiation Strategy?..."Credit Union’s Unique Regional Win-Win Service is Our Weapon"

He added, "The essence is to supply funds to struggling ordinary citizens such as farmers, fishermen, and small business owners. Since those working in the fields find digital difficult, traditional face-to-face services cannot be ignored."

Regarding ESG management policies, he said, "As a cooperative, environmental issues like carbon emissions are less significant," but also mentioned, "We are conducting external commissioned research to fulfill the role of credit unions." The results will be reflected in ESG management strategies to respond accordingly.

He expressed confidence in social contribution and governance areas. Chairman Kim explained, "Credit unions have welfare projects stipulated in the Credit Union Act. We have started operating a foundation and seven inclusive finance projects, and established the ‘Credit Union Happiness Sharing Division’ within the central federation’s organization to support these efforts."

He continued, "Credit unions have members who voluntarily invest funds necessary for business, and operations are democratically conducted according to the consensus of members. We adopt and comply with operational principles established by the International Cooperative Alliance (ICA) and the World Council of Credit Unions (WOCCU)."

Regarding differentiation strategies from other financial sectors, he stated, "We must actively promote the nature of community-based finance," and expressed, "We are expanding credit union’s unique regional win-win services that leverage the characteristics of financial cooperatives suited for an aging and low-growth era."

This content was produced with the assistance of AI translation services.