Germany's financial sector is built on three pillars: commercial banks, savings banks, and cooperative banks. Commercial banks handle large corporate finance and investment banking (IB) operations, while domestic lending is managed by savings banks and cooperative banks. Among them, Sparkasse serves the German public with a full range of financial services — from deposits to loans and foreign exchange — with a public-interest mandate. It effectively operates as "universal banking." This is why nearly 60% of Germans use Sparkasse.
While rates vary by region, Sparkasse offers mortgage loans at around 5% annually. It takes deposits within the local community, provides stable real estate loans on that basis, and extends credit to individuals and the "Mittelstand" (small and medium-sized enterprises). This virtuous cycle enables fine-grained financial support.
Indeed, when a stable revenue base such as mortgage lending is in place, room opens up to actively support self-employed borrowers or to ease the interest burden on personal credit loans. At German savings banks like Sparkasse, about 78.5% of corporate loans are long-term. Short-term loans account for just 9.7%, less than 10%. That directly benefits local businesses and individuals. "In a universal banking structure where regional financial institutions handle deposits, mortgages, and SME loans together, they can monitor transaction history and repayment capacity over the long term," a financial industry official said. "This relationship-based finance forms the foundation for managing both interest rates and soundness."
The situation in France is similar. The country's three major financial cooperatives — Crédit Agricole, Crédit Mutuel, and BPCE — held a 77.4% share of the French mortgage market in 2021. This stands in stark contrast to Korea, where savings banks and mutual finance institutions combined hold just 11%.
At Eurocaja Rural, one of Spain's largest credit cooperatives, housing-related loans accounted for 61.4% of the loan portfolio as of the end of last year. Navy Federal, the largest credit union in the United States, had a mortgage portfolio of $84.3 billion in 2022, far exceeding its $2.5 billion in collateralized loans and $3.5 billion in unsecured loans. "Even in Japan, many households use regional banks rather than megabanks for their loans," a financial industry official said. "That's because regional financial institutions have established a virtuous cycle based on relationship-based finance."
Still, some argue that the Sparkasse model cannot be applied to Korea as-is. Sparkasse's institutional foundation differs from Korean savings banks and mutual finance institutions because local governments participate as founders and supervisory bodies. Sparkasse's unsecured loan rates also reach as high as 15–17%. "Korea could discuss separately establishing a financial institution led by the public sector or local governments," a secondary financial sector official said. "But as the internet-only bank case shows, without a clear role division among sectors, any new institution will inevitably fail again."
