Tag: Collaboration

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Preserving the Soul of Fintech: Why Extreme Decentralization Matters

3D render abstract digital visualization depicting neural networks and AI technology_EFTG

By David Dean

Head of M&A
Evergreen Financial Technology Group

I was recently speaking with a fintech founder about why my team at Evergreen Financial Technology Group (EFTG) is so emphatic about a philosophy we call extreme decentralization. As we talked, it occurred to me that we could do a better job of publicly articulating what decentralization really means and why we believe it matters so deeply, particularly for CUSOs and fintech businesses serving credit unions.

What Is Decentralization?

In a decentralized operating model, most decisions are made by operating companies rather than by corporate headquarters. A highly decentralized organization is characterized by dozens—or even hundreds—of separate offices and brands, empowered CEOs who manage their own profit and loss statements (P&Ls), and a razor-thin corporate team. Most decisions that affect employees or customers are made at the operating company level, without corporate involvement.

A centralized company, by contrast, is defined by a robust corporate team with highly empowered functional leaders. Local offices operate at the direction of corporate, following strict brand guidelines and standard operating procedures. Decisions that fall outside those procedures typically require approval from headquarters.

EFTG’s Operating Model

EFTG’s model is simple. We are on a mission to be the best home for mission critical fintech businesses and their leaders. To achieve that mission, we are deeply committed to two things: creating a permanent home for these businesses that’s optimized for long term, sustainable success and empowering leaders through a decentralized operating model.

For founders and business owners, this means EFTG aims to be the best acquisition partner to care for your employees, customers, and brand; especially important in CUSOs, where trust and continuity matter deeply to credit unions and their members.

For leaders, it means EFTG is a partner in your entrepreneurial operating experience. We offer a level of empowerment that’s difficult to find in traditional corporate or private equity environments, alongside a business system designed to drive market-leading growth.

Extreme decentralization is central to our value proposition. It enables us to preserve the soul of the companies we acquire while empowering leaders to fully live into their potential as entrepreneurs.

The Advantages of Decentralization

We believe decentralization leads to higher growth and stronger long-term returns on capital for several reasons:

  1. The best people want to be empowered.

The most talented operating leaders want to be entrepreneurial CEOs with meaningful decision-making authority and aligned incentives—not branch managers executing someone else’s plan. Our view is simple: the best and most energized teams win, and those teams thrive in empowered environments.

  1. It’s easier to grow smaller P&Ls.

Growing a $5 million business by 20% requires adding $1 million in revenue. Growing a $100 million business by 20% requires adding $20 million. Percentage growth rates naturally decelerate as companies scale. Our solution is to keep P&Ls as small as practical and growth rates as high as possible.

  1. Business owners prefer decentralization.

Founders generally prefer selling to acquirers who retain their brand and provide continuity for employees and customers. While we continuously improve the businesses we acquire, we don’t disrupt them the way centralized acquirers often do. In fact, every business owner who has partnered with EFTG cites our decentralized model as a key factor in their decision.

  1. Accountability is crystal clear.

In a decentralized structure, each operating CEO has a straightforward scorecard: their P&L and KPIs. If growth stalls or margins slip, responsibility is clear. Decentralization doesn’t mean unconditional empowerment. Empowerment is earned through performance and can be lost when results falter. Centralized organizations often suffer from murky accountability, where functional leaders blame local teams and local teams point back to corporate.

  1. Bureaucracy is minimized, margins are maximized.

Large corporate teams inevitably introduce bureaucracy: approval processes, reporting requirements, meetings, mandates, and policies. As corporate structures grow, coordination costs and organizational friction rise, slowing operating companies and dragging on margins. Leading decentralized organizations often operate at significantly higher margins than centralized peers, even though they duplicate certain roles locally. Simply put, bureaucracy is more expensive than local autonomy.

Decentralization as a Catalyst for Innovation

When people think about disruptive innovation, they often picture a small startup working out of a garage, not a large organization with hundreds of employees.

That intuition is right.

Innovation thrives in environments that reward speed, ownership, and experimentation. It struggles in bureaucratic structures where ideas must climb ladders of approval before they can reach customers.

This is one of the most powerful, and often overlooked, benefits of extreme decentralization.

At EFTG, our operating companies function like independent startups. They move quickly, stay close to customers, and make decisions locally. They are not constrained by centralized product roadmaps or corporate committees.

At the same time, unlike early-stage startups, our companies have already emerged from the garage. They’ve achieved product-market fit. They serve established credit unions and community banks. They’ve built trusted brands, durable customer relationships, and strong internal cultures.

That combination, startup agility paired with real-world scale, creates a uniquely fertile environment for innovation.

Nowhere is that more evident than in how our businesses are approaching artificial intelligence.

Our companies are already embedded deeply in the workflows of credit unions and community banks. They understand operational realities, regulatory expectations, and member experience. Many serve as trusted technology advisors to their customers, helping institutions adopt new tools thoughtfully rather than reactively.

That positions them not just to experiment with AI, but to deploy it responsibly – both internally to improve service delivery and externally to help financial institutions solve real business problems.

In 2025 alone, we saw meaningful progress across our portfolio as teams began using AI to enhance customer support, streamline operations, improve analytics, and accelerate product development. But what excites us most is what comes next.

We believe 2026 will mark a step change.

Not because of a single breakthrough product, but because of the collective impact of dozens of empowered companies innovating in parallel.

In a decentralized model, innovation doesn’t come from one centralized lab. It comes from the edges: from engineers, product managers, customer success teams, and operators who wake up every day thinking about how to better serve their clients. Multiply that by a growing collection of mission aligned businesses, each deeply connected to the credit unions and community banks they serve, and you begin to see the scale of what’s possible.

This is why decentralization matters so much in fintech.

It allows innovation to emerge organically from real customer needs. It preserves accountability. It accelerates learning. And it ensures that new technologies, especially powerful ones like AI, are shaped by practitioners who understand the communities they serve.

For credit unions and CUSOs, this distinction is critical. The future of financial services won’t be built solely by centralized platforms chasing scale. It will be built by trusted partners who combine technical capability with deep industry context and who are empowered to act locally, quickly, and responsibly.

Measuring Decentralization

One way to measure decentralization is by comparing the size of the corporate team to the total number of employees.

Will Thorndike, author of The Outsiders, describes this as the ratio of total employees to corporate employees; a clear indicator of where decisions are being made and how much bureaucracy exists. In centralized organizations, this ratio might be under 25:1. Highly decentralized companies will have a ratio of 100:1 or higher. Hall of fame decentralized companies like Constellation Software and Berkshire Hathaway operate well in excess of 100:1 (Berkshire operates at ~15,000:1).

When Centralization Makes Sense

There are situations where centralization works well:

  • Uniform products or services. if a company is selling a small handful of products or services that are uniform in nature, centralization is a better structure. It makes sense that Apple designs iPhones and AirPods at corporate instead of delegating product decisions to its retail stores.
  • Winner-take-most markets. in a winner-take-most market like a social network, a credit card network or a ratings agency it makes sense to take maximum advantage of scale by centralizing. These markets also tend to be characterized by a uniform product or service.
  • Certain low-cost producers. there are certain low-cost producers that benefit from a centralized structure. Walmart relies on a strong centralized purchasing function, though they empower their local store operators with certain decision rights.

Fintech serving credit unions typically doesn’t fit these categories. Credit unions often depend on customer support, regulatory nuance, high-level security, vertical expertise, and continuity of service. Centralization in this context often leads to employee churn, slower innovation, and weaker client relationships.

What’s at Stake

What’s ultimately at stake is the culture of fintech businesses and the quality of service delivered to credit unions and their members.

A decentralized operating model preserves that culture. It fosters innovation, growth, and continuous improvement. That’s why decentralization sits at the core of EFTG’s mission to be the best home for businesses and their leaders.

We pursue this work with tremendous energy because every company we acquire represents an opportunity to preserve autonomy, empower teams, and support the long-term success of fintech partners serving cooperative financial institutions and their communities.

This article was inspired in part by EFTG board member Jeff Totten’s post, “Why We Believe in Extreme Decentralization.”

To learn more or connect with Evergreen Financial Technology Group, please visit their website at https://evergreenftg.com/.

About the Author: 

David Dean
Head of M&A
Evergreen Financial Technology Group

David Dean is a seasoned fintech executive and strategic leader in mergers & acquisitions, specializing in founder-led software businesses serving credit unions and community banks. As Head of M&A at Evergreen Financial Technology Group (EFTG), he leads sourcing, development, and execution of acquisitions that align with EFTG’s long-term, buy-and-hold investment philosophy.

Before joining EFTG, David served as Chief Operating Officer and Chief Investment Officer at CUSG, where he oversaw corporate development, strategic partnerships, and portfolio company growth. His career reflects more than a decade of experience driving sustainable value creation across fintech, SaaS, and media, guided by a disciplined and collaborative investment approach.

A California native and graduate of the University of Missouri-Columbia, David now lives near Detroit, Michigan, with his family.

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The Perfect Credit Union Investment

By Guy Messick
Advisor
NACUSO Business Services

In collaboration with Mitchell Amsler
CEO
Capital Management

NACUSO is always searching for ways collaboration can help credit unions manage the issues facing them… issues such as how does a credit union earn sufficient income from its excess cash to grow and remain competitive? Through the use of CUSOs, CU Capital Management (CUCM) has transformed the sale/leaseback model to enable credit unions to retain all the profits within the credit union industry. Instead of private funds purchasing real estate from credit unions and reaping the financial rewards of a stream of lease payments, CUSOs are the purchasers. The credit unions that fund these purchases receive the profits.

Business Model

Credit unions invest in a Funding CUSO. The Funding CUSO invests in Property Owning CUSOs that purchase real estate (headquarter buildings, operation centers and branch networks) from credit unions. There is one Property Owning CUSO per purchase transaction. If it is a large purchase, the Property Owning CUSO uses debt to finance some of the purchase price. The loans typically have conservative loan-to-value ratios, i.e. 50% to 60%. The Property Owning CUSOs lease the real property back to the selling credit union on a long-term basis. The revenue from the leases flows back to the Funding CUSO and the credit union investors.

The minimum investment in the Funding CUSO is $1 million. There is no maximum. When a credit union invests in the Funding CUSO, the credit union is immediately earning revenue from the existing portfolio. As new properties are purchased, the credit unions are given an opportunity to invest more. Even if a credit union does not invest more, the credit union will continue to benefit from the revenue generated from the entire portfolio.

The Investment Provides Industry Leading Returns

Earns Returns in Excess of Other Permissible Investments

CUCM does not take a fee unless the annualized returns to the credit union investors is at least 5%. The current annualized returns are over 6%. As the rents increase each year, the revenue generated will also increase. All the leases are triple net with the credit union tenant assuming all maintenance and repair obligations, including repairs to the building structure. The lessor can step in and make repairs if the credit union tenant does not do so, at the tenant’s cost. This arrangement enables the credit union tenants to continue to have control over their building and enables the investors to enjoy returns not reduced by building maintenance expenses.   

Returns Are Not Tied to Market Fluctuations

The federal interest rates will increase and decrease over time. The revenue from the CUSO is locked in by contract and does not fluctuate based on the general interest climate. In a low interest rate environment, the return on this investment becomes even more attractive than other investment options tied to the market. As market rates decline, the interest paid on loans associated with the purchases of real estate will be lowered, resulting in higher investment yields.

Returns Are Paid Quarterly

Partial investment returns are paid quarterly. After the accounting for the subject year is complete by the first quarter of the following year, the balance of the annual return is paid.

No Legal Restrictions on the Amount of Revenue That Can Be Earned

Since this is a CUSO investment, there are no limits on the amount of revenue a credit union can earn. The only restriction is that a credit union may only invest up to the amount of its unused CUSO investment limit. Note that this CUSO investment limit increases each year as the credit union assets increase. Only the credit union’s cash investment in its CUSOs is counted, and not the present worth of its CUSOs. If an investment is made by a credit union’s CUSO, that amount is not counted in the credit union’s CUSO investment limit.

The Net Income is Higher than Loan Net Income

Every loan program has sourcing, underwriting, servicing, and collection costs that reduce the net yield on a loan. While the representatives of the credit union owners make up the boards of the Funding CUSO and Property Owning CUSOs, CUCM does all the administrative work (e.g., sourcing investors and sellers, managing the purchase process, managing the lease relationship, and managing the financial obligations to the investors). CUCM takes a portion of the investment return as a fee, but only if the credit unions receive at least a 5% annualized return. There is no assets under management (AUM) fee charged by CUCM to the Funding CUSO.

Lending Opportunities are Also Available

The larger purchases include both equity and debt. This means the investors also have lending opportunities. The investors are given priority to both bid to be the lead lender and buy loan participations. 

Low Risk

Excellent Repayment Source 

The revenue for the investment returns is lease payments from well-capitalized credit unions for real estate assets critical to their operations. If a credit union merges with another credit union, the continuing credit union has the legal obligation to continue to make lease payments. If the credit union is conserved, the conservator has the obligation to continue to make payments to retain the lease.

Great Collateral

The investors are the owners of the real estate, and that is an asset that can be sold if the credit union vacates the real estate. When CUCM evaluates a purchase, consideration is given to the ability to sell the real estate if the need arises. If there is a higher risk due to the location of a property, a purchase may be declined or the rent may be set at an amount sufficient to compensate for this risk. CUCM has permitted credit union tenants to sublease a small portion of real estate, but only if the credit union remains liable for 100% of the rent under the master lease.

Diversification of Risk

The Funding CUSO’s ownership of multiple Property Owning CUSOs gives it a diversified investment portfolio.

Isolation of Risk

If there are legal issues with one credit union and its real estate, the legal risk is isolated to the respective Property Owning CUSO that is the owner/landlord and does not flow back to the Funding CUSO and its investors.

Good Liquidity

Each year, CUCM has the value of the Funding CUSO established by a qualified third party so that, if any credit union wants to sell its CUSO ownership, there will be a predetermined price that enables a timely sale. CUCM believes that the attractiveness of the investment and the third-party appraisal will enable a credit union to quickly find (with the help of CUCM if desired) a credit union buyer. This liquidity will enable a credit union to earn attractive returns on funds in the short- and mid-term without making a long-term commitment.

Supports Other Credit Unions

Beyond the financial rewards to the investors, the fact is that these transactions are highly beneficial to the selling credit unions. The sellers get an immediate boost in capital to help them grow, which can be transformative in some cases. The sellers/tenants also have the comfort of dealing with a CUSO as their long-term landlord and not multiple private funds. A stronger credit union industry benefits all credit unions.

This is a Proven Concept

Properties have been purchased from large credit unions such as Truliant Federal Credit Union, Affinity Federal Credit Union, and Wescom Central Credit Union, as well as from smaller credit unions. There are currently 24 credit union investors from all over the United States who have invested over $111 million in capital in the Funding CUSO and made, in the aggregate, over $111 million in loans. The investors have enjoyed annualized net investment returns that were 4.93% in 2022, 5.00% in 2023, and 5.00% in 2024. The net annualized return to CUSO investors is expected to be between 5.00% and 5.50% in 2025 before rising to above 6.00% net in 2026. As the rental income increases each year, so will the investment returns. The Funding CUSO has distributed over $10 million to its credit union owners since 2022 through these regular distributions.  

The Opportunity is Huge      

The NCUA reports state that over 3,300 credit unions collectively hold over $31.5 billion in real estate assets on their books. That represents the collective cost less depreciation, and thus represents a fraction of the estimated market value. The credit union industry has plenty of runway to help the sellers immediately grow capital and the investors to make very attractive returns. There is no reason to give away this revenue to the private sector.

To learn more or connect with CU Capital Management, please visit their website at www.cucapitalmanagement.com or email info@cucapitalmanagement.com.

About the Authors: 

Guy Messick
Advisor
NACUSO Business Services

Guy served as NACUSO General Counsel for over 40 years, advocating for CUSOs with Congress, NCUA and other regulatory agencies. He has authored a book on credit union collaborations and is honored as a CUSO pioneer in America’s Credit Union Museum in Manchester, New Hampshire.

Mitchell Amsler
CEO
CU Capital Management

Mitchell serves as the founder and CEO of CU Capital Management.  In that capacity, he oversees a network of CUSOs focused on sale leasebacks for credit unions.  CU Capital Management’s CUSO network allows credit unions to participate on all sides of a sale leaseback transaction — as sellers, investors and/or lenders.  Most importantly, this allows the full benefits of a sale leaseback to remain within the credit union industry and provides for an alignment of interest between credit union sellers/tenants and the CUSO landlord’s credit union investors/owners.

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Why Strategic CUSO-Led Acquisitions Are Accelerating In The Credit Union Ecosystem

By John Dearing

Partner
Capstone Strategic

Strategic acquisitions are no longer a peripheral conversation in the credit union industry. They are becoming a core growth lever – used selectively, deliberately, and with far more strategic intent than in prior cycles. 

This shift is especially visible in activity taking place through CUSOs with the acquisition of private companies. What began as a collaborative model to share cost and capability is increasingly being used as a practical way to extend the credit union’s strategic reach: bringing new capabilities, talent, and products closer to the core mission. 

At Capstone Strategic, we see this acceleration driven by what we call the Big 3: talent, technology & innovation, and product breadth. Together, they explain why acquisition activity is rising, and why it makes sense now. 

A Market Creating Permission to Act 

The broader M&A environment matters. According to comments from Mario Gabelli in Barron’s, U.S. deal activity rebounded sharply in 2025, reaching approximately $2.3 trillion in total value, a 49% increase over 2024. Interest rate cuts, modest regulatory relief, and accelerating demand for AI and digital capabilities reignited what Gabelli called “corporate lovemaking” across sectors, including financial services. 

While Gabelli’s language was colorful, the implication is straightforward: organizations are restructuring more quickly and more intentionally. Credit unions – long known for discipline and patience – are now acting when the strategic rationale is clear and the structure supports responsible execution. 

The Big 3 Driving Strategic Acquisitions 

Talent: Compressing Time in a Scarce Market 

Specialized talent has become one of the most persistent constraints facing credit unions. Data engineers, cybersecurity leaders, compliance specialists, developers, product managers: these skills are scarce, expensive, and increasingly difficult to retain. 

Building these capabilities internally is possible, but slow. Recruiting and integrating niche expertise can take months, if not years, during which competitive expectations continue to rise. 

Strategic acquisitions help compress that timeline. Rather than assembling capabilities role by role, through aqua-hires, credit unions gain access to established teams, operating models, and institutional knowledge that already function at scale. In practice, this is less about headcount and more about momentum. When speed increasingly determines relevance, acquiring capability through a CUSO can be the most rational option. 

Technology & Innovation: From Aspiration to Execution 

Most credit unions have well-defined digital ambitions. Execution is where friction emerges. 

Legacy cores, integration risk, and limited internal development capacity can stall even the strongest roadmaps. Multi-year build cycles consume leadership attention and introduce risk. 

Acquisition activity through a CUSO often bridges this gap. These businesses bring proven platforms, tested integrations, and hard-earned experience deploying technology within credit union constraints. The result is a faster path from strategy to execution, without placing a single, concentrated bet on an internal build. 

Just as important, ownership alignment matters. Strategic control allows technology to evolve alongside long-term priorities, rather than being constrained by external vendor roadmaps. 

Product Breadth: Owning Relevance, Not Renting It 

Member expectations continue to expand across lending, payments, compliance services, data insights, wealth, and business solutions. Few credit unions can build and sustain differentiation across all these areas independently. 

Historically, partnerships provided access. Increasingly, acquisitions provide control, additional economics, and optionality. 

Bringing product capabilities closer to the organization allows credit unions to shape the member experience more deliberately, manage distribution with intent, and retain long-term value creation within the ecosystem, rather than exporting it to third-party providers. Property & casualty insurance, wealth management and title insurance are highly complementary to a credit unions core lending business and therefore extremely active areas right now.  

The distinction is subtle but powerful: owning growth versus renting it. 

A Structural Shift, Not a Cyclical One 

The rise in acquisition activity tied to CUSOs is not about chasing deal volume or capitalizing on a hot M&A market. It reflects a deeper shift in how credit unions think about growth, relevance, and resilience. 

The most effective leaders aren’t asking, “What can we buy?” They’re asking, “What capabilities must we have five years from now, and how quickly do we need to get there?” 

Increasingly, strategic acquisitions are part of that answer. 

Discipline Still Wins 

None of these advantages diminish the need for rigor. Successful acquisitions require strategic alignment, clear criteria for evaluations, thoughtful integration, and realistic expectations. Ownership alone does not create value. 

But when aligned to strategy, acquisitions executed within the CUSO ecosystem offer something increasingly rare in financial services: the ability to grow faster and smarter, without compromising mission. 

The Bottom Line 

Strategic acquisitions through the very flexible CUSO vehicle are rising because conditions demand it. Talent scarcity, accelerating technology cycles, and expanding member expectations are forcing leaders to rethink how growth happens. 

CUSOs sit at the center of that rethink… not as the story themselves, but as a critical enabler of strategic capability-building. 

Growth today is no longer about doing more. It’s about doing the right things, with the right capabilities, at the right time. And for many credit unions, that path increasingly includes well-considered acquisitions supported by the CUSO model.

To learn more or connect with Capstone Strategic, visit their website.

About the Author: 

John Dearing
Partner
Capstone Strategic

John Dearing, CFA, has been a driving force behind Capstone Strategic since 1996, helping organizations pursue disciplined, proactive external growth. John leads Capstone’s market-leading CUSO practice, buy-side team, and operations, advising leadership and Boards on acquisitions, investments, and strategic partnerships. For nearly two decades, he has worked extensively with credit union and CUSO leaders on acquisition growth strategy, with a focus on using the CUSO model to expand capabilities and strengthen competitive positioning.

His experience includes facilitating acquisitions and strategic growth initiatives for organizations such as Velera, PureIT CUSO, Achieva Credit Union, Nutmeg State Financial, RenoFi, Great Lakes Credit Union, South Carolina Financial Solutions, OceanAir Federal Credit Union, Janusea, and One Washington Financial.

A frequent speaker and educator, John has taught thousands of executives on proactive external growth, acquisitions, and business valuation, and regularly presents at national and regional industry events.

John holds an MBA from Georgetown University’s McDonough School of Business and a BS in Business Administration from Bucknell University. He is a Chartered Financial Analyst (CFA), a member of the Washington Society of Investment Analysts, and the founder of an investment partnership.