South Korea’s Credit Unions Collaborate to Expand Growth

Centralized IT System Strengthens World’s Third Largest CU Movement

January 23, 2009

2009_1_23_Officials from South Korean visit
Participants in WOCCU’s December visit to South Korea included (left to right) CUNA Mutual Group’s Paul Treinen, NACUFOK training center director Kwangtaek Choi, WOCCU’s Dave Grace and MECU’s Kris Kim.

SEOUL, South Korea - At year-end 2008, South Korea's 994 credit unions began using a single centralized IT system to serve their combined five million members. The unified approach to technology, a daunting proposition for many credit union movements, is the latest step in a collaborative approach that characterizes South Korea's credit unions. It's also made the country's credit union movement the world's third largest in terms of members served.

"Credit unions have grown on the basis of co-existence, faith, honesty and trust for nearly half a century," said Oh-man Kwon, president and chairman of the National Credit Union Federation of Korea (NACUFOK), the country's credit union trade association and central liquidity facility that houses the IT system. "We have made ceaseless efforts to improve the social and economic status of common people and Korea's middle class since the movement began in 1960."

The first credit unions migrated to the new IT system in early December during a visit by Dave Grace, World Council of Credit Unions' (WOCCU) vice president of association services, and Kris Kim, vice president and controller for Motorola Employees Credit Union (MECU) in Schaumberg, Ill. Shared technology is just the latest collaborative effort that has helped South Korea's credit union movement grow, according to Grace.

"Credit unions in many countries are looking for ways to centralize operations and gain national brand recognition common within the banking industry without sacrificing local ownership and the member service touch," Grace said. "South Korea has done that and is serving its members with great success."

2009_1_23_Sought Korean CU at night

Common signage and brilliant colors identify South Korean credit union branches, all of which benefit from being part of a unified marketing effort.

The most visible byproduct of the credit unions' efforts is a unified marketing program that positions the cooperatives under one common brand. South Korean credit unions still operate as individual, member-driven financial cooperatives, but their position in the markets they serve rival those of the largest banks. With common signage and similar products and services, they still maintain a distinct member service approach. Credit union collaboration has enabled the institutions to capture greater market share without sacrificing their traditional "personal touch," Grace said.

South Korea's credit union movement, which will celebrate its 50th anniversary in 2010, has grown to serve 13.5% of the country's population. According to WOCCU's 2007 Statistical Report, the country ranks third in size of membership (5 million), after the United States (88.5 million members) and Canada (10.9 million members). MECU's Kim said the growth can be credited both to the nature of the South Korean family as well as the credit union movement's collaborative efforts.

"Koreans are very family-oriented,' said Kim, who was born in South Korea in 1959 and emigrated to the U.S. in 1972. "If the father joins the credit union, chances are the entire clan will follow suit. Once they're members, Koreans are not likely to change institutions."

South Korean credit unions have followed a similar unified approach in their development, Kim said. That direction will give the movement strength and reach that otherwise would not have been available to them. He added that credit union strength will only increase now that all institutions operate from the same centralized IT location.

"Each individual credit union operates almost like a service center that's part of the larger credit union system," Kim explained. "The movement has gained tremendous operational and strategic efficiency through continued collaboration. U.S. credit unions may be too individualistic to ever cooperate at such a high level, but I think there are components we could adopt from the Korean model."

World Council of Credit Unions is the global trade association and development agency for credit unions. World Council promotes the sustainable development of credit unions and other financial cooperatives around the world to empower people through access to high quality and affordable financial services. World Council advocates on behalf of the global credit union system before international organizations and works with national governments to improve legislation and regulation. Its technical assistance programs introduce new tools and technologies to strengthen credit unions' financial performance and increase their outreach.

World Council has implemented 300+ technical assistance programs in 89 countries. Worldwide, 68,882 credit unions in 109 countries serve 235 million people. Learn more about World Council's impact around the world at

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