Spense Raises $2.8 Million to Help Banks Launch Smarter Credit Products

Bengaluru-based banking infrastructure startup Spense has raised $2.8 million in a seed funding round led by Arkam Ventures. The round also saw participation from Razorpay Ventures, GrowthCap Ventures, Atrium Ventures, and angel investors including Kunal Shah.

Spense was co-founded in 2022 by Pawan Kumar and Srinivas Krishnamurthy. The startup is building technology that helps banks launch modern credit products, such as credit cards and credit lines, without replacing their existing core systems.

This is an important problem to solve. Banks want to offer faster, more flexible credit products, but their older technology systems often make new product launches slow and expensive. Spense is trying to sit between old banking infrastructure and new-age fintech needs.

What Spense does

Spense builds banking infrastructure for secured credit products. In simple words, it helps banks offer credit backed by customer assets.

For example, a bank may want to offer a credit line to a customer based on deposits or other eligible assets. Traditionally, building such a product can take a long time because the bank has to connect core banking systems, deposit systems, card management systems and customer service workflows.

Spense helps connect these systems in real time. This allows banks to launch new credit products faster without rebuilding their entire technology stack.

Why the funding matters

The $2.8 million seed round gives Spense capital to move faster in a market where banks and fintechs are looking for better credit infrastructure.

The company plans to use the funds to deepen banking partnerships, speed up product development, expand its engineering and go-to-market teams, and launch Credit Line on UPI, also called CLOU.

Credit Line on UPI is an important area in Indian fintech. It can allow approved users to access credit through UPI instead of depending only on cards or traditional loans. If banks adopt this widely, it could become a major shift in everyday digital credit.

The next leap for Spense

The next leap for Spense is to help banks move from slow, manual credit systems to faster and more automated credit infrastructure.

This does not mean replacing banks. It means helping banks modernise from within. Many banks already have customers, deposits and trust. What they need is sharper technology to launch credit products quickly and manage them efficiently.

Spense’s platform uses AI to automate workflows in areas such as onboarding, servicing, collections and customer support. These are usually labour-heavy parts of banking. If automation works well, banks can reduce operational load and serve customers faster.

A simple example is customer onboarding. Instead of multiple manual checks and back-and-forth processes, AI-supported workflows can help verify, route and process applications more smoothly.

Why banks need this kind of infrastructure

India’s digital payments ecosystem has grown quickly, but credit still has room to become more flexible. UPI made payments easy. Now banks and fintech companies are trying to make credit more accessible while keeping risk under control.

Secured credit can be useful because it is backed by assets. This may reduce risk for banks compared with completely unsecured lending.

For customers, it can mean easier access to credit products linked to their existing banking relationship. For banks, it can create a new way to serve customers without taking unnecessary risk.

Where Spense fits in the fintech market

Spense is not a consumer lending app. It is an infrastructure company. That means its customers are likely banks and financial institutions, not regular users directly.

This is an important difference. A consumer may never see the Spense name while using a credit product. But the technology behind that product may help the bank process, approve, service and manage it.

This kind of business can grow quietly but deeply. If banks trust the platform, it can become part of their credit operations.

Competitors and market context

Spense will compete in a serious fintech infrastructure market. Comparable players may include Setu, Decentro, M2P Fintech, Zeta, Niro, RazorpayX and other banking technology or embedded finance platforms.

The competition will depend on the exact product area. Some companies focus on APIs. Some focus on cards. Some focus on embedded finance. Some focus on lending infrastructure.

Spense’s specific focus on bank-native secured credit and Credit Line on UPI can help it create a clear position if it executes well.

Challenges ahead

1. The first challenge is bank partnerships. Banks move carefully because credit is a sensitive area. Spense will need to show reliability, security and compliance.
2. The second challenge is integration. Banking systems are complex. Connecting core banking, deposits and card systems in real time is not easy.
3. The third challenge is AI accuracy. Automation can save time, but banks will expect strong controls, audit trails and human oversight where needed.
4. The fourth challenge is scale. Once a product goes live with a bank, it may need to handle large transaction volumes and customer requests without failure.

Conclusion with key takeaways

Spense’s $2.8 million seed funding shows growing investor interest in fintech infrastructure that helps banks modernize credit products. The startup is solving a practical problem – how banks can launch credit cards and credit lines faster without replacing their existing systems.

Key takeaways

• Spense raised $2.8 million in seed funding.
• The round was led by Arkam Ventures.
• Razorpay Ventures, GrowthCap Ventures, Atrium Ventures and angel investors including Kunal Shah participated.
• Spense was co-founded in 2022 by Pawan Kumar and Srinivas Krishnamurthy.
• The startup helps banks launch credit cards and credit lines backed by customer assets.
• The funds will support banking partnerships, product development, team expansion and Credit Line on UPI

Facts Input- Entrackr