Klarna is undergoing significant changes driven by AI, leading to substantial job reductions.
- The Swedish fintech has seen an 86% reduction in pre-tax losses despite rising credit losses.
- AI implementation has dramatically improved operational efficiency, replacing hundreds of roles.
- Klarna’s workforce has decreased from 5,000 to 3,800, with further reductions expected.
- The company is preparing for a potential IPO, considering venues in London and New York.
Klarna, the prominent Swedish fintech company, is experiencing transformative changes as it incorporates artificial intelligence into its operations. This shift has resulted in a substantial reduction of its workforce, cutting 1,000 jobs. The integration of AI technology has significantly boosted efficiency, which, according to Klarna, has helped to reduce operating expenses and enhance gross profits.
In the first half of 2024, the company reported losses of SwKr2.33 billion (£173 million) due to bad loans. Despite these mounting losses, Klarna achieved an impressive reduction in pre-tax losses by 86% to SwKr262 million (£19.4 million), demonstrating effective financial management. The company emphasised its near break-even performance in the second quarter of the year as evidence of substantial progress.
One of the most profound impacts of AI on Klarna’s operations has been within customer service. The deployment of AI-driven chatbots has replaced the work of approximately 700 employees, illustrating the increasing role of AI in cost-cutting and efficiency improvement. Klarna’s overall workforce decreased from 5,000 to 3,800, with projections indicating a potential drop to around 2,000 in the coming years.
The potential for a stock market flotation has been suggested by CEO Sebastian Siemiatkowski, with possible venues being London and New York. However, no concrete decisions have been announced yet. This move comes as Klarna’s credit losses rise by 39% year-on-year, driven partly by a 16% surge in gross transaction value to SwKr523 billion (£39 billion). The company’s credit loss rate has reached 0.45%, a point of concern linked to their rapid expansion in the United States.
Once valued at $45.6 billion, Klarna’s worth significantly decreased to $6.7 billion after a funding round in 2022. Despite this, the company continues to be a major player in the ‘Buy Now, Pay Later’ market, with 575,000 merchants in 45 countries and 31 million monthly users. Klarna’s adoption of AI reflects a broader trend in the financial sector, where technology is reshaping traditional business models.
Klarna’s strategic incorporation of AI is pivotal as it navigates financial challenges and considers future opportunities in the stock market.
