Klarna CEO wants to turn the platform into a 'super app' with AI
Klarna's CEO is so bullish about artificial intelligence that he sees it changing the way the fintech's 100 million users bank every day as he sets out to diversify the company's services.
On Wednesday, Klarna — a pioneer of the popular "buy now, pay later" payment method — is announcing the launch of mobile phone plans in the U.S. via a partnership with telecom services startup Gigs. The plans come with unlimited data, calls and texts and will cost $40 a month.
The new phone offering aligns with CEO Sebastian Siemiatkowski's vision to make Klarna more of an all-encompassing personalized financial "super app" that can offer services outside the realms of traditional finance.
It isn't the company's first attempt. Previously, Klarna tried to make itself more akin to a "super app" — similar to Ant Group's Alipay and Tencent's WeChat Pay — offering additional services through multiple different buttons. This ended up being "confusing for the customer," Siemiatkowski told CNBC in an interview.
But the Klarna boss stressed the part AI can play in Klarna's fresh attempt.
"I think in this new AI world, there's a better opportunity to serve customers with different services and then adopt the kind of level of articulation and visualization of those services than there was historically," he said.
"With AI, you can abstract and adopt the experience much more to the specific user you're dealing with," Siemiatkowski said in an interview.
Super apps are popular in China and in other parts of Asia. They're meant to serve as a one-stop shop for all your mobile needs — for example, having taxi-hailing and food ordering in the same place as payment and messaging services.
While super apps have flourished in Asia, adoption in Western markets has nonetheless been slower due to a number of reasons.
Siemiatkowski says he's spending a lot of his time focusing on AI.
"There's a tremendous opportunity for that — but it's just getting it to work," he said. "Everyone who has used it knows it can spit out some exciting stuff but then you need to make sure that it works every time."
Going forward, Klarna's chief sees the platform becoming more of a "digital financial assistant" for users' every-day banking needs.
"If we have some information that suggests that you are overpaying for your carrier subscription or your data or whatever, we can now offer you both a suggestion of a better price model, but also with a click, implement that and make it a reality," Siemiatkowski said.
Acknowledging issues with Klarna's previous attempt to become a super app, Siemiatkowski says the technology just wasn't "mature" enough at the time.
Klarna reported a $99 million loss for the quarter that ended in March, citing one-off costs relating to depreciation, share-based payments and restructuring.
Still, Klarna has a perception problem to overcome. In the U.S., the firm has become synonymous with the "buy now, pay later" (BNPL) payment method, which allows consumers to pay off orders over monthly installments — typically interest-free.
By contrast, in Europe, consumers recognize they can use Klarna to store their deposits and pay for things in one go as well as via a credit plan, Siemiatkowski noted.
He also expressed frustration with "the kind of memes that we get in in the U.S. when it's like, 'Oh, Klarna launched with DoorDash ... it is a sign of the macroeconomic environment," referring to a tie-up the company announced with food delivery app DoorDash earlier this year that was met with backlash online.
Siemiakowski said this kind of reaction wouldn't happen in the German or Nordic markets, where Klarna operates more like online payment system PayPal.
He sees a future where Klarna works as a more all-encompassing financial ecosystem with add-on services such as features for investments in stocks and cryptocurrencies — which, he adds, is "not that far off."
"Offering people the ability to invest in both stock and crypto is is what's becoming a kind of more standard part of a neobank offering," he said, while stressing he doesn't want to compete with popular U.S. stock trading app Robinhood.
Klarna paused plans to go public in April, after U.S. President Donald Trump announced sweeping tariffs on dozens of countries.
Siemiatkowski said that Klarna has already achieved what it set out to do in order to be ready for that milestone — namely, building up a brand in the U.S.
"The U.S. is now our largest market by number of users. It's a profitable market for us," he said. "Those things have been accomplished."
Whether the company does or doesn't go public, the business strategy for Klarna remains the same.
"That is just a healthy way to drive liquidity for our shareholders, as well as give the company more ways to fund itself, if it would like to do so, and ... to show that this is a an established company," Siemiatkowski said.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Los Angeles Times
an hour ago
- Los Angeles Times
Plan to sell off public land in the West nixed from ‘big, beautiful bill' amid GOP backlash
A controversial plan to sell hundreds of thousands of acres of public land across Western states — including California — was axed from the Republican tax and spending bill amid bipartisan backlash, prompting celebration from conservationists. Sen. Mike Lee (R-Utah), who spearheaded the proposal, announced he was pulling the provision on Saturday night on the social media platform X. Lee had said the land sale was intended to ease the financial burden of housing, pointing to a lack of affordability afflicting families in many communities. 'Because of the strict constraints of the budget reconciliation process, I was unable to secure clear, enforceable safeguards to guarantee that these lands would be sold only to American families — not to China, not to BlackRock and not to any foreign interests,' he wrote in the post. For that reason, he said, he was withdrawing the measure from the 'One Big Beautiful Bill' that Trump has said he wants passed by July 4. Lee's failed measure would have mandated the sale of between roughly 600,000 and 1.2 million acres of Bureau of Land Management land in 11 Western states, including California. The areas available for auction were supposed to be located within a five-mile radius of population centers. The effort represented a scaled-back version of a plan that was nixed from the reconciliation bill on Monday for violating Senate rules. The initial plan would have allowed for the sale of up to 3.3 million acres of land managed by BLM and the U.S. Forest Service. Lee's decision to scrap the proposal arrived after at least four Republican senators from Western states vowed to vote for an amendment to strike the proposal from the bill. At lease five House Republicans also voiced their opposition to the plan, including Reps. David Valadao of California and Ryan Zinke of Montana, who served as the Interior secretary during Trump's first term. The death of the provision was celebrated by conservationists as well as recreation advocates, including hunters and anglers, even as they steeled themselves for an ongoing fight over federal lands. The Trump administration has taken steps to open public lands for energy and resource extraction, including recently announcing it would rescind a rule that protects 58.5 million acres of national forestland from road construction and timber harvesting. Some critics saw the now-scrapped proposed land sale as means to offset tax cuts in the reconciliation bill. 'This is a victory for everyone who hikes, hunts, explores and cherishes these places, but it's not the end of the threats to our public lands,' said Athan Manuel, director of Sierra Club's Lands Protection Program, in a statement. 'Donald Trump and his allies in Congress have made it clear they will use every tool at their disposal to give away our public lands to billionaires and corporate polluters.' Chris Wood, president and chief executive of Trout Unlimited — a nonprofit dedicated to conserving rivers and streams to support trout and salmon — described protecting public lands as 'the most nonpartisan issue in the country.' 'This is certainly not the first attempt to privatize or transfer our public lands, and it won't be the last,' Wood said in a statement. 'We must stay vigilant and defend the places we love to fish, hike, hunt and explore.' Lee, in the Saturday X post, suggested the issue remained in play. He said he believed the federal government owns too much land — and that it is mismanaging it. Locked-away land in his state of Utah, he claimed, drives up taxes and limits the ability to build homes. 'President Trump promised to put underutilized federal land to work for American families, and I look forward to helping him achieve that in a way that respects the legacy of our public lands and reflects the values of the people who use them most.'
Vox
10 hours ago
- Vox
What the rise of 'buy now, pay later' services tells us about the economy
You've probably noticed it by now: You're shopping online for some makeup or a new pair of running shoes or a water table for your toddler, and when you go to check out, you have a new option — why not break up the cost into four payments, made over time? US consumers, especially Gen Z and millennial ones, have been embracing 'buy now, pay later' services like Klarna and Afterpay with gusto the last few years. It's not hard to see the attraction: Unlike a credit card, most BNPL plans don't carry interest, and they generally don't impact your credit score (though that is now changing). On social media people tout BNPL as a way to buy stuff you want but don't have the cash for right then — or maybe ever. And that's starting to show up in the data: Leading BNPL company Klarna — which recently partnered with the food delivery service DoorDash, spawning a thousand memes — saw its net losses from consumers not paying their loans more than double in the first quarter of this year. All this has Kyla Scanlon worried. Scanlon is an author and economic commentator, best known for breaking down economic issues through blog posts and videos on social media. In a video she published shortly after Klarna announced its partnership with DoorDash, Scanlon called the rise of BNPL a symptom of our 'poor-impulse-control economy.' 'What I worry about is that the convenience and the impulsivity that it allows for allows for the expansion of the grift economy, of a world where people are spending money on things that they don't need to and they're just totally lost in that cycle,' Scanlon told Today, Explained co-host Noel King. Scanlon talked to King about buy now, pay later, Gen Z's relationship to debt, and what financial responsibility looks like in today's economy. Below is an excerpt of the conversation, edited for length and clarity. There's much more in the full podcast, so listen to Today, Explained wherever you get podcasts, including Apple Podcasts, Pandora, and Spotify. You're a commentator, you're a public intellectual, you're also a member of Gen Z, and you speak directly to Gen Zers who are operating in the economy. How are young people using BNPL? A lot of Gen Zers have had very common interactions with debt. Student loan debt is a big part of the life of a Gen Zer. Medical bills, anything involving a credit score. Debt has been so normalized for the younger generation that when they see something like BNPL, it's like, 'Oh, this is just casual debt.' For young people, they've been raised in the shadow of the 2008 crisis and student loan debt. It's just what they do with their money. This is interesting, that debt has always been available to Gen Z. If you're an older millennial like I am, that's not really the case. You might remember getting your first credit card when you were 22, but there was no Apple Pay. You couldn't just pay for stuff on your phone. And it strikes me that my nieces and nephews who are teenagers, they can do that. They have this ease with paying for stuff and taking on debt for stuff that never occurred to me when I was young. A lot of that is structural. In 2020, the government sent out unemployment checks. In 2021, the Fed had rates really close to zero. We're always talking about the deficit. We're always talking about how much money the United States as a country owes. And so I think for everybody, they're looking at that and they're like, If the government owes all this money, surely I can have a little bit of debt, too. And then credit scores have become such a core part of the American identity. It really informs a lot — how you can buy a house or if you can even get certain loans. I think people view debt as structural to themselves as a person, and that's increased. And I think it really has a lot to do with the environment that Gen Z has grown up in and the fact that these tools are so readily available and they're so easy to use. Talk to me a bit about debt. Is it dangerous? When you look at debt systemically, it's not inherently a bad thing. Like most things, it's a tool. Like social media, you could say it's bad, but it's just a tool. It's all about how you use it. Same with debt. BNPL in itself isn't evil, especially if you can pay it all off without having to face those high interest rates. Credit cards themselves aren't evil. But it's really about the system that encourages these sorts of products to be created. Real wages were stagnant for a really long time. The entry-level labor force has really deteriorated. It's very tough to get a job right now. If you're graduating from college and the college wage premium has eroded quite a bit, rent is high because we don't build enough housing. Groceries are up. People are looking at the very high prices, the impossibility of ever buying a house, the struggles that they might be facing in the labor force. It's like, Well, sure, it might be irresponsible to use BNPL to get a moisturizer from Sephora, but what else am I going to do? I don't see a solution before me. And so I think that's been the big thing with debt — we've used it as a tool in order to navigate some of the hairier parts about being in the United States right now. I think historically you might say, Look, you can't afford the Sephora lotion right now, why don't you just wait? And it sounds like what you were saying is that's a bit of a privileged or maybe old-fashioned idea of how paying for things works. Right! I think, 'Why don't you just wait?' ignores some of the ladder issues that we're facing as Gen Z, younger people — even millennials, in some capacity, are facing this broken-ladder problem where they could wait to buy that moisturizer, but that would require the entry-level labor market to free up again, that would require wages to really speed up, that would require the housing market to normalize. So I think a lot of people blame younger people for using debt and using BNPL. And you should be careful — I don't think you should be living above your means in an extravagant way. But it really is a psychological buffer of sorts, where people are just like, Well, I don't know what else to do, so I'm going to go buy this thing. It is an element of instant gratification, the same thing that we see in social media, but for Gen Z-ers and younger people. There isn't that stability, that expectation of stability in the traditional sense. And so I think these little small luxuries matter — buying that moisturizer matters because it is indulgent in a certain way, but it's also an act of agency in an economy that doesn't feel like it's allowing you into it. It does feel like there is some American ethos here that says, To live is to be in debt, and we've all accepted that. I mean, that's the only way you can get by sometimes. There's that misquoted statistic about living paycheck to paycheck. It's not 60 percent of Americans living paycheck to paycheck. It's far lower, but I think a lot of people just feel like, one wrong move and the whole thing could come tumbling down.
Los Angeles Times
a day ago
- Los Angeles Times
Buy now, pay later loans will soon affect some credit scores
NEW YORK — Hundreds of millions of 'Buy Now, Pay Later' loans will soon affect credit scores for millions of Americans who use the loans to buy clothing, furniture, concert tickets, and takeout. Scoring company FICO said Monday that it is rolling out a new model that factors the short-term loans into their consumer scores. A majority of lenders use FICO scores to determine a borrower's credit worthiness. Previously, the loans had been excluded, though Buy Now, Pay Later company Affirm began voluntarily reporting pay-in-four loans to Experian, a separate credit bureau, in April. The new FICO scores will be available beginning in the fall, as an option for lenders to increase visibility into consumers' repayment behavior, the company said. Still, not all Buy Now, Pay Later companies share their data with the credit bureaus, and not all lenders will opt in to using the new models, so widespread adoption could take time, according to Adam Rust, director of financial services at the nonprofit Consumer Federation of America. Here's what to know. Typically, when using Buy Now, Pay Later loans, consumers pay for a given purchase in four installments over six weeks, in a model more similar to layaway than to a traditional credit card. The loans are marketed as zero-interest, and most require no credit check or only a soft credit check. The main three credit reporting bureaus, Experian, TransUnion, and Equifax, haven't yet incorporated a standard way of including these new financial products in their reports, since they don't adhere to existing models of lending and repayment. FICO, the score of the Fair Isaac Corporation, uses data from the bureaus to calculate its own credit score, and is independently choosing to pilot a new score that takes the loans into account. BNPL providers promote the plans as safer alternatives to credit cards, while consumer advocates warn about 'loan stacking,' in which consumers take on many loans at once across several companies. So far, there's been little visibility into this practice in the industry, and the opacity has led to warnings of 'phantom debt' that could mask the health of the consumer. In a statement, FICO said that their new credit score model is accounting for the growing significance of the loans in the U.S. credit ecosystem. 'Buy Now, Pay Later loans are playing an increasingly important role in consumers' financial lives,' said Julie May, vice president and general manager of business-to-business scores at FICO. 'We're enabling lenders to more accurately evaluate credit readiness, especially for consumers whose first credit experience is through BNPL products.' FICO said the new model will responsibly expand access to credit. Many users of BNPL loans are younger consumers and consumers who may not have good or lengthy credit histories. In a joint study with Affirm, FICO trained its new scores on a sample of more than 500,000 BNPL borrowers and found that consumers with five or more loans typically saw their scores increase or remain stable under the new model. For consumers who pay back their BNPL loans in a timely way, the new credit scoring model could help them improve their credit scores, increasing access to mortgages, car loans, and apartment rentals. Currently, the loans don't typically contribute directly to improved scores, though missed payments can hurt or ding a score. Since March, credit scores have declined steeply for millions, as student loan payments resume and many student borrowers find themselves unable to make regular payments on their federal student loans. Nadine Chabrier, senior policy and litigation counsel at the Center for Responsible Lending, said her main concern is that the integration of the loans into a score could have unexpected negative effects on people who are already credit-restrained. 'There isn't a lot of information out there about how integrating BNPL into credit scoring will work out,' Chabrier said. 'FICO simulated the effect on credit scoring through a study. They saw that some users' scores increased. But if you factor in something that, last week, didn't affect your credit, and this week, it does, without having very much information about the modeling, it's a little hard to tell what the consequences will be.' Chabrier cited research that's shown that many BNPL users have revolving credit card balances, lower credit scores, delinquencies, and existing debt. Women of color are also more likely to use the loans, she said. 'This is a credit vulnerable community,' said Chabrier. Rust, of the Consumer Federation of America, said he doesn't expect this to be a game-changer for consumers who already have a credit profile. 'Are we at a point where using BNPL loans will dramatically alter your credit profile? Probably not,' he said. 'I think it's important that people have reasonable expectations.' Rust said the average BNPL loan is for $135, and that repaying such small loans, even consistently, might not result in changes to a credit score that would significantly move the needle. 'It's not about going from 620 to 624. It's about going from 620 to 780,' he said, referring to the kind of credit score jumps that affect one's credit card offers, interest rates on loans, and the like. Still, Rust said that increased transparency around the loans could create a more accurate picture of a consumer's debts, which could improve accurate underwriting and keep consumers from over-extending themselves. 'This addresses the problem of 'phantom debt,' and that's a good thing,' he said. 'Because it could be something that keeps people from getting too deeply into debt they can't afford.' Lewis writes for the Associated Press.
