Klarna is undergoing significant changes as it embraces AI to streamline operations.
- The Swedish fintech firm has reduced its workforce by 1,000, attributing job cuts to AI-induced efficiency gains.
- AI is prominently used in customer service, with chatbots replacing the equivalent of 700 jobs.
- Despite rising credit losses, Klarna reports improved financial performance and approaches break-even.
- A potential stock market listing is being considered, with London and New York as possible venues.
Klarna, a leading Swedish financial technology company, has announced a reduction of 1,000 jobs due to an increased focus on AI technologies that are reshaping its business model. The company reports that efficiency enhancements through AI adoption have reduced operating costs and improved profitability. AI’s impact is most notable in the customer service sector, where chatbot technology has supplanted the roles of approximately 700 employees.
The company’s workforce has decreased from 5,000 to 3,800 within a year, with projections indicating a further reduction to around 2,000 in the coming years. Klarna has not disclosed specific numbers for its UK operations but confirms that job cuts will be uniformly distributed across its international offices.
Despite the job losses, Klarna’s financial metrics show optimism. The company has reported an 86% reduction in pre-tax losses for the first half of 2024, despite experiencing a 39% rise in credit losses. This rise in credit losses is partly attributed to a 16% increase in gross transaction value.
Klarna continues to explore the possibility of a stock market flotation. Founder and CEO Sebastian Siemiatkowski mentioned the potential for an initial public offering (IPO) next year, with London and New York as probable locations, though no concrete decisions have been made yet.
Once known as Europe’s most valuable fintech, Klarna has seen its market valuation drop significantly from its peak. Despite this, the company maintains a vast merchant network and a substantial user base, which upholds its position as a dominant force in the buy-now-pay-later market.
The company bears the risk associated with borrower defaults under its business model and manages delinquent accounts through late fees, credit reporting, and, occasionally, debt sales.
Klarna’s strategic shift towards AI and potential public offering highlights the evolving landscape of financial services.
