Data-driven approach will help expand lending to underserved communities with sustainable growth
Southern Chautauqua Federal Credit Union has quietly served its low-income membership in Western New York. Southern Chautauqua is “Doing Well by Doing Good” in the neighborhood. Salus, a leading fintech creating members for life by powering inclusive solutions, is joining them on their journey to focus on their data to continue serving ALICE (Asset Limited, Income Constrained, Employed) households.
Southern Chautauqua, which has grown from 150 members to become the fourth-largest credit union in Western New York by membership (now over 20,000), has built its success on serving working families in one of New York State’s most economically challenged counties. Under the leadership of CEO John Felton, the credit union has achieved a 16% capital ratio and ROA of more than 2% while maintaining a mission-focused approach to community lending.
“ALICE families are good people that are just trying to make ends meet, good people that want to take their kids on vacation,” Felton said. “We work with our families. We talk to them, we help prioritize what they’re looking for, and we try to make the best decisions possible by talking to people.”
The collaboration will leverage Salus’ advanced data analytics platform, Sentinel, to help Southern Chautauqua identify successful lending patterns and expand access to affordable financial services. The two companies’ missions aligned.
“If Salus enables us to say ‘yes’ to more of our members, while at the same time managing our risk, that’s a win-win-win.”
The partnership emerged from a chance meeting at a conference where Salus Founder and CEO James Chemplavil heard Felton presenting about Southern Chautauqua’s innovative approach to serving ALICE communities. Felton was impressed that Chemplavil stayed for the entire presentation, intently listened and learning about Southern Chautauqua ’s success. The ensuing conversation about the credit union’s work turned into a partnership.
“We believe in the face-to-face,” Felton explained. Relationships matter, he added: “We listen to BOND, not RESPOND. Vendors don’t have to stay in the room during presentations, right? James did. James came over and started asking questions. He was genuine. He was interested because he wanted to help. I recognized James as a genuine person, I thought, ‘This is my kind of guy!’”
Chemplavil returned the compliment. “John and his team at Southern Chautauqua have built something truly remarkable: a sustainable business model that serves their community’s most vulnerable members while generating strong returns. Our platform will help them scale their impact by identifying the characteristics that predict success, allowing them to serve more people in need while maintaining their impressive performance metrics. This is exactly the kind of mission-driven partnership that demonstrates how technology can amplify human-centered financial services.”
More on Southern Chautauqua’s work
Southern Chautauqua’s innovative approach includes programs like starter-interrupter car loan for individuals with prior repos, very poor credit, short residence or employment, or no cosigner. The credit union’s team can approve those who don’t have a parent who’s able to cosign. It attracts young members. Rates do start at 18% with built-in incentives for borrowers to improve their credit scores and reduce their rate over time.
“Our loan officers call our members to invite them back in with the purpose of lowering their interest rate and reviewing their credit report,” Felton says. “The credit union also provides comprehensive financial education and regular check-ins with members to help them reorganize debt and improve their financial stability; we build trust!”
Felton emphasizes, “We aren’t partnering with Salus to tighten underwriting, far from it. We’re doing this to loosen underwriting,” Felton emphasized. “There are people who need to borrow money. I can’t let them go to buy-here, pay-here lots. I can’t, I won’t. I don’t like to say no, and I don’t like charge-offs either. I believe we can filter this in a way that will help us identify the markers of success. If Salus allows us to make more loans to our community by focusing on the markers of success, while at the same time cutting back on our delinquencies and our charge-offs, that’s a win-win-win.”
The Salus platform will help Southern Chautauqua collect and analyze hundreds of data points from loan applications and member interactions to identify patterns of success and areas for improvement. Rather than replacing human decision-making, the technology will augment the credit union’s relationship-based lending approach by providing deeper insights into member needs and risk factors.
Southern Chautauqua’s commitment to community reinvestment is evident in its operations, where the credit union employs nearly double the staff typical for an institution of its size. Felton believes in giving the staff the time to live up to our high standards of member support. And, with its CDA investment, the credit union is able to donate nearly $100,000 annually to community organizations. It also operates four branches in local high schools and provides extensive financial literacy programming throughout Chautauqua County.
The implementation of Salus’ platform is expected to begin later this week after the credit union’s lending team identifies key data points and success markers that will inform future lending decisions. The partnership represents a significant step forward in using AI to expand financial inclusion.
“We aren’t looking to replace the human touch. We are looking to enhance the information for our loan officers to make more loans, Felton says.
He adds, “We manage our risk. We don’t eliminate our risk. You can take somebody who’s drowning in credit card debt, determine if they are in the debt reduction phase of life or not, approve those who are, cut their interest rate usually in half with high-yield lending. Now you’ve got yourself a loyal member who is also going to tell other people about the credit union.”