Fuse raises $25M to push legacy systems out of US credit unions

Startup Fuse has raised $25M to develop an AI-native platform meant to replace outdated loan origination systems at US credit unions. The company also announced a $5M rescue fund, a dedicated pool of money that covers the costs of exiting existing contracts with legacy vendors.

The market Fuse is targeting has long been considered a technological anomaly. US credit unions are non-profit financial organizations that serve about 135 million members and manage assets of more than $2 trillion. Most of them still run on software built in the 1990s and early 2000s. Loan Origination Systems (LOS) are supplied by a limited group of vendors, including Fiserv, Jack Henry and FIS, which have held the market for decades. The result: slow application reviews, heavy reliance on manual work, and a practical inability to integrate modern AI tools.

Fuse offers a platform written from scratch, with no legacy code. The key principle is AI by default rather than as a layer bolted onto legacy systems: automated credit risk scoring, analysis of the borrower's financial behavior, and real-time integration of external data. According to the company, this significantly cuts application review time and lowers operating costs. For credit unions competing with banks and fintech services, loan approval speed has long been a competitive advantage.

The most unconventional move is the rescue fund. The main barrier to switching platforms is not unwillingness to change but the financial cost of leaving. Contracts with legacy vendors are typically long-term and include penalty clauses: for a small credit union with $100-300M in assets, early termination can cost hundreds of thousands of dollars. Fuse takes those costs on itself. In effect, the company pays for the client's right to leave a competitor, a model familiar in telecom but rare in B2B fintech.

The move signals confidence in Fuse's unit economics: if the company is willing to invest upfront in acquiring a customer, it expects a sufficiently long LTV. A credit union is not a startup with a two-year horizon but a stable, regulated institution with a predictable business.

About 4,800 credit unions in the US are the platform's potential audience. Most do not have in-house IT teams able to carry out a technological transformation on their own, which makes a ready-made solution with implementation support especially attractive.

Fuse's strategy is a classic attack on a conservative market: remove not only the technological barrier to switching but the financial one as well. If the rescue fund proves effective, the model could become a template for other segments of financial infrastructure, where legacy holds its position not through quality but through the high cost of exit.