April 22, 2024 - This Thirty-Year AI Expert Challenges the Notion That AI Can Think

Klarna Adds Open Banking for UK Customers

Swedish payments FinTech Klarna is now offering open banking-powered settlements in the U.K. 

“The launch means consumers can now pay Klarna directly from their bank account instead of using a debit card, bypassing card networks and marking a major milestone in Klarna’s ambition to build a payments network of the future,” the company said Thursday (March 14).

According to a news release, the launch gives open banking a major boost in the U.K., as Klarna has 18 million British customers in a country where around five million consumers make open banking payments per month.

“Open banking offers a huge opportunity for Klarna to reduce the cost of payments to society by cutting out the established card payment networks, and using up-to-date bank account data to make ever better lending decisions,” said Wilko Klaassen, Klarna’s vice president for open banking. “This new launch builds on the success we have seen in 10 countries across Europe and will give U.K. open banking a major boost.” 

To make payments, Klarna users click Pay by bank, which takes them to their mobile banking app to complete the payment. The company said linking bank accounts to its platform offers consumers insights into their spending and other budgeting tools.

“Plus, sharing bank data can help Klarna lend money more wisely, using the consumer’s real spending habits, to ensure that Klarna’s lending decisions are an exact fit with the consumer’s budget,” the company said.

Research by PYMNTS shows that consumers are big fans of the type of faster payments open banking can offer. 

The PYMNTS Intelligence report How Open Banking Can Provide Fast and Easy Consumer Payoutsfound a significant segment of the nearly 2,600 consumers surveyed preferred faster payments and expected payments processing to be carried out in a timely fashion. 

Yet, 45% said the current payments process their banks offer can take up to seven days to complete, a turnaround that four in 10 consumers said is “unsatisfactory.”

In comparison, of the 5% surveyed who are able to complete bank transactions within 60 seconds, 92% of them said such velocity was “extremely” satisfying.

“The fact that just 5% of these bank payouts can be completed in about a minute indicates only a small fraction of consumers can now experience instant payments,” PYMNTS wrote earlier this month. “This suggests the banking industry still has work to do if it hopes to deliver on customer expectations.”