CEO & Co-Founder, Klarna
Klarna CEO on the company's mission to disrupt big banks
Klarna is branching out the AI-powered global payments network to add new retail banking services. Klarna CEO Sebastian Siemiatkowski joins Asking for a Trend to discuss the move and his vision for the future of the company.
"Back in the days when you used to use a card from a bank, you would press one for debit and two for credit. And then banks stopped doing that because people weren't building as big balances and weren't revolving as much, and that meant lower revenue and profit for banks. But it's a healthier credit product. It's a healthier product to choose on a transactional basis, whet...
About Sebastian Siemiatkowski
Sebastian Siemiatkowski, CEO and co-founder of Klarna, has been discussing the company's evolution from a buy now, pay later provider towards broader payment and banking services. In recent interviews, he described Klarna as aiming for "parity with Visa and MasterCard as a network," with a focus on being available everywhere and becoming a preferred brand for everyday spending. He stated that Klarna's charge card equivalent product is "healthier to consumers" than credit cards because it offers fixed-term, zero-interest installments and does not revolve balances. Siemiatkowski also said that Klarna does not offer revolving credit, calling it "a bad concept" that is "confusing." Siemiatkowski addressed the company's AI-driven customer service changes, saying that the company's AI bot handled tasks equivalent to about 850 agent positions. He noted that because Klarna outsourced those roles, no employees lost their jobs. On regulation, he said he is "very much in favor for free capitalism" but acknowledged that "some rules may be helpful" in certain markets. Regarding Klarna's banking license, obtained in 2010, he said the company sees only advantages from being regulated, including access to deposits and clear compliance guidelines. He described the U.S. as Klarna's largest and fastest-growing market, adding that the company's experience operating in a regulated, lower-interchange European market positions it to offer "more affordable solutions" in the U.S.
Transcript (10 segments)
✨ AI-enhanced transcript with speaker attribution
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Reporter0:00
Klarna is branching out, the AI-powered global payments network adding new retail banking services. Noting this is a significant step forward in its mission to disrupt retail banking. Joining us now to discuss is Klarna co-founder and CEO Sebastian Siemiatkowski. Sebastian, thanks for being here. It's always good to see you, and it's late in Stockholm, so we appreciate you joining us. So as we look at these new products, how do they fit into this disruption strategy that you're talking about that sort of came from buy now pay later but now has branched out into products that are a lot broader than that?
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Sebastian Siemiatkowski0:36
Yeah, I think I'm really excited about this. I mean, if you think about it, to me it goes back to my early days at Burger King back in the days when you used to use a card from a bank, you would press one for debit and two for credit, and then banks stopped doing that because people weren't building as big balances and weren't revolving as much, and that meant lower revenue and profit for banks. But it's a healthier credit product, a healthier product to choose on a transactional basis whether to use debit or credit. So now having availability to a Klarna balance where you can use that money to spend online is an important part of the debit side of our business. It's actually already, it's not as known in the US, but we are a fully licensed bank in Europe and 30% of our hundred billion dollar volume per year is already debit. So this is a key step in that, but also to your point on the long-term ambition of disrupting the big banks, because there is so much to do, especially in the US where payment fees are still substantially higher than what we're used to in Europe.
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Reporter1:32
And Sebastian, as you do get into more of these products that are more traditional bank-like products, how do you also continue to differentiate yourself from a traditional bank? Like what is that value proposition and your sales pitch to a consumer to say, well, you should do this with us and not with a traditional bank?
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Sebastian Siemiatkowski1:50
I think, you know, actually this strategy started in 2015 for us where we sat down and said, where is consumer retail banking going? We said at some point in time you'll have this digital financial system that will analyze your spending habits and say things like, hey, I looked into this and I realized that I can renegotiate your mortgage for you and save you $100 a month, and I'll do all the paperwork, you just have to say yes. Right? And when you realize that's where we're heading, and with ChatGPT and everything going on, you realize that's going to come sooner rather than later. Then the conclusion of that is obviously that means a much more competitive banking market, because a lot of the excess profits we see in banking are due to switching costs. So we want to bring back services that really serve the customer, to save them time, save them money. And the information customers share with their banks is very extensive. In addition, Klarna also has SKU-level data on all transactions. I mean, not only that you spend $100 at Macy's, we know exactly the product and items that you purchase. And that information that customers are trusting us with allows us to provide very, very relevant advice and insights to help them do that. So I think that's the future of banking, very different to the kind of more predatory lending practices that we saw in the 90s. So I'm very optimistic about it, but it will take a few more years to fully accomplish it.
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Reporter3:06
Sebastian, I want to, last time we talked we asked a little bit about consumer spending and what you guys were seeing. Here in the US we're very focused today on retail sales and on Walmart, so I'm curious what you're seeing in your customer base in terms of the flow of consumer spending, if you've been seeing any changes since the last time we talked a few months ago.
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Sebastian Siemiatkowski3:24
No, so I think that, like, I was actually more nervous around Christmas when, in my opinion, some of the pretty good Christmas sales we saw now almost nine months ago were mostly discount-driven by the retailers. And since then, to your point, a lot of other retailers have reported slightly weaker spending, but we are actually seeing now the opposite. We're seeing a very strong trend in the spending habits of our customers. And considering we have over 35 million users in the US across, like, top, you know, we cover more than 50 of the top 100 US retailers, I think it's pretty valuable information, and it's pretty positive actually.
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Reporter3:56
And Sebastian, of course I can't let you go without asking you an IPO question. You've come to expect it from me, especially since today there was a report on Bloomberg that you guys were close to hiring Goldman to help lead your US IPO. Any kind of update you want to give us on what we can expect? Can you confirm it's Goldman? Can you tell us when it might happen? What do you think?
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Sebastian Siemiatkowski4:17
I'd love to share with you more when I know when I know more, and more is to be confirmed. But again, look, to us it's always been critical that we want to be a global retail bank. We think there's going to be three or four large global retail banks in the future that are going to disrupt all the incumbents. We want to be one of them. The US was one of the key important aspects of that. We're now profitable in the US, we're above a billion dollars in revenue soon in the US, and so a lot of the prerequisites have been accomplished that we thought were important for an IPO. And in addition to that, we still have so much opportunity to grow because retail banking is like a trillion dollar market opportunity, right? So there's unlimited opportunity to disrupt this industry.
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Reporter5:01
Okay, we'll be in touch. Sebastian, thanks a lot. Good to talk to you as always.
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Sebastian Siemiatkowski5:06
Same as always, thank you.