Fintech Investments

Klarna Eyes Expansion, Banking Products As Next Areas Of Growth

Klarna — the Swedish FinTech that gives consumers 30 days to pay for their purchases, letting them return them before actually shelling out the money — is in expansion mode and is gearing up to launch its first banking product.

In an interview with the Financial Times, Klarna’s co-founder and chief executive Sebastian Siemiatkowski said the company is on a long-term mission with its service, which is so popular that it has propelled the company to become one of Europe’s largest startups in FinTech. “There is a massive opportunity now to change an industry where, unfortunately, banks have been more absorbed by themselves than their customers. We can bring that focus on customers — we want to be a digital assistant but focused on financial items, managing your economy,” Klarna’s CEO said in the interview.

Klarna is currently valued at $2.5 billion and is in expansion mode, eyeing breaking into new markets and gearing up to roll out a payment card.  While the company is still small with revenue of $515 million in 2017, unlike lots of other FinTechs it was profitable in 2017 in large part because of the fees it charges merchants and users — and thanks to the interest charged to customers who are late with their payments. That profit has drawn interest from private equity firms including Permira as well as Visa, both of which invested in the company in 2017. The payment card, which is being tested with around 1,000 customers, will come with new perks such as a bank statement that shows the actual product you purchased and the ability to track delivery, return the product or discuss an issue with a customer service rep all from inside the Klarna app. “We want to help people make smarter spending decisions. What is totally different to a traditional bank is that we are doing it in a customer-centric way. I don’t think Steve Jobs built the iPhone to destroy Nokia, but to make people’s lives better. We are trying to do the same. The consequence is: I’m not going to care about it if the banks’ profits go down,” he said in the interview with the Financial Times. To achieve that goal, the paper noted Siemiatkowski broke up Klarna into teams of about 250 with each focused on a specific problem that consumers face and how to solve that problem. He pointed to tracking online orders for one example. “How can we speed it up, how can we visualize it? Each team is creating value,” he said.



The PYMNTS Cross-Border Merchant Friction Index analyzes the key friction points experienced by consumers browsing, shopping and paying for purchases on international eCommerce sites. PYMNTS examined the checkout processes of 266 B2B and B2C eCommerce sites across 12 industries and operating from locations across Europe and the United States to provide a comprehensive overview of their checkout offerings.