In 2023, after developing an automotive lending startup for three years, co-founders Andres Klaric and Marc Escapa identified that LLMs could revolutionize the loan origination system (LOS), a crucial element of the lending sector.
Dissatisfied with traditional software’s constraints, Klaric, originally from Bolivia, and Escapa, from Spain, shifted their focus to create Fuse, an AI-native LOS.
On Monday, Fuse announced securing a $25 million Series A funding round led by Footwork, Primary Venture Partners, NextView Ventures, and Commerce Ventures.
An LOS functions as the main system for most lenders, covering the complete loan process—from application and underwriting to approval and credit distribution. However, current systems can require a year to integrate and bind users to costly, multi-year contracts, Klaric stated.
Fuse aims to enhance lenders’ efficiency using AI, facilitating higher loan volumes, automating underwriting, and cutting operational expenses.
Having over 100 clients already, Fuse offers the first 50 qualifying credit unions complimentary access to its platform until their existing contracts with traditional LOS vendors end. The startup has designated $5 million for a ‘rescue fund’ to back this initiative.
Klaric emphasizes that this isn’t merely a marketing tactic, noting that high legacy software costs often prevent credit unions from prematurely ending their contracts to switch providers.
Nikhil Basu Trivedi, Footwork co-founder and general partner, expressed support for Fuse, citing over 4,000 U.S. credit unions needing tech updates.
“We understand credit unions are eager to embrace AI but are unsure how to proceed,” he remarked.
Basu Trivedi likened the LOS to an ERP or CRM, highlighting its critical role in daily credit union operations. Historically, switching LOS providers has been challenging. However, similar to many AI ERP-type startups, Fuse claims easier adoption.
Fuse targets legacy LOS systems like publicly traded nCino and private-equity-owned MeridianLink.
Additionally, Fuse faces competition from other AI-enhanced LOS startups like Casca and Glide.
Klaric is committed to aiding credit unions in cutting expenses, primarily because these entities support the American middle class.
“Credit unions and smaller financial institutions possess all necessary elements to succeed. They have local reach, focus, superior member experience, and advantageous branch locations. Their only shortcoming is appropriate technology,” he explained.