In 2023, after three years building their auto financing startup, Fuse co-founders Andres Klaric and Marc Escpapa realized that an LLM could help them modernize something even more important: the loan origination system (LOS), the backbone of the lending industry.
Frustrated with the limitations of legacy software, Bolivian native Klaric (pictured left) and Spanish immigrant Escapa (pictured right) pivoted their business to build Fuse, an AI-native LOS.
On Monday, Fuse announced it had raised $25 million in Series A led by Footwork, Primary Venture Partners, NextView Ventures, and Commerce Ventures.
The LOS serves as the primary system of record for most lenders, managing the entire loan lifecycle, from initial application and underwriting to final approval and credit disbursement. But traditional systems can take up to a year to integrate and typically require expensive multi-year contracts, Kralik said.
Fuse claims that by leveraging AI, its agents can help lenders process more loans, automate underwriting and significantly reduce operational costs.
The company, which already has more than 100 customers, hopes to ease the transition for credit unions to Fuse by offering the first 50 eligible institutions free access to its platform until their current contracts with traditional LOS vendors expire. To help with this, the startup has allocated $5 million to a program it calls the “Relief Fund.”
“This isn’t just a marketing gimmick,” Kralik argues, explaining that many credit unions can’t afford to break their current contracts and switch providers due to the high cost of legacy software.
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Footwork co-founder and general partner Nikhil Basu Trivedi told TechCrunch that he supported Fuse because there are more than 4,000 credit unions in the U.S. and Fuse’s technology is long overdue for an overhaul.
“We know credit unions are really struggling, and we want to implement AI, but we don’t know how,” he said.
Basu Trivedi compared LOS to ERP and CRM and noted that they are equally important to a credit union’s day-to-day operations. He said it has traditionally been very difficult to exchange one LOS for another. However, as is the case with many AI ERP-type startups, the founders promise that Fuse can be deployed relatively quickly.
Some of the legacy LOS systems that Fuse is replacing include publicly traded nCino and private equity-owned MeridianLink.
Unsurprisingly, Fuse isn’t the only startup developing AI-infused LOS. The company’s competitors include Casca and Glide.
Kralik said he strongly believes in the mission of helping credit unions reduce costs, primarily because they serve America’s middle class.
“Credit unions and small financial institutions have everything they need to win. They have a local presence, a local focus, a great member experience. They even have branches in very good locations. The only thing they don’t really have is the right technology,” he said.
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