Fuse Raises $25M to Replace Legacy Loan Systems at US Credit Unions
Fuse, a startup building AI-powered loan origination software for credit unions, has raised a $25 million Series A led by Footwork, Primary Venture Partners, NextView Ventures, and Commerce Ventures. The company aims to replace the aging loan origination systems (LOS) that serve as the backbone of the lending industry.
What Fuse Does
A loan origination system manages the entire loan life cycle: from initial application and underwriting to final approval and credit disbursement. Traditional systems can take as long as a year to integrate and typically lock institutions into expensive multi-year contracts. Fuse claims its AI agents can help lenders process higher loan volumes, automate underwriting, and significantly reduce operational costs.
The $5 Million Rescue Fund
Fuse already has over 100 customers. To accelerate adoption, the company has allocated $5 million for a "rescue fund" that offers the first 50 qualifying credit unions free access to its platform until their current legacy contracts expire. Co-founder Andres Klaric insists this is not a marketing gimmick, explaining that many credit unions cannot afford to break their current contracts to switch providers.
Why Credit Unions Need Help
There are over 4,000 credit unions in the United States, and their technology is long overdue for an overhaul. Footwork co-founder Nikhil Basu Trivedi compared the LOS to an ERP or CRM, noting that swapping out a legacy system has traditionally been extremely difficult. The legacy systems Fuse is trying to displace include publicly traded nCino and private-equity-owned MeridianLink.
Competition
Fuse is not alone in this space. Competitors like Casca and Glide are also developing AI-infused loan origination systems. The race to modernize credit union technology is heating up as these institutions look for ways to compete with larger banks and fintech companies.
The Bottom Line
The thesis makes sense: credit union technology is genuinely ancient, and $25M to build a modern replacement is reasonable. But the "AI-native" framing deserves scrutiny. The hard part of loan origination is not the software interface — it is compliance, regulation, and risk management. Automating underwriting with AI is the easy pitch; getting regulators comfortable with it is the harder sell. The $5M rescue fund is a smart growth hack, but 100 customers is still early for a market of 4,000+ institutions. Worth watching, but the real test comes when these AI-processed loans start hitting default rates.