Business
Klarna is cutting 1,000 jobs as AI overhauls the company ahead of its IPO
![Klarna, the buy now, pay later (BNPL) fintech leader, has cut over 1,000 jobs as part of a strategic shift towards artificial intelligence, with further reductions expected before a potential stock market float.](https://blogaid.org/wp-content/uploads/2024/08/Klarna-is-cutting-1000-jobs-as-AI-overhauls-the-company.jpg)
Klarna, the buy now, pay later (BNPL) fintech leader, has cut more than 1,000 jobs as part of a strategic shift to artificial intelligence, with further reductions expected ahead of a potential IPO.
The Swedish fintech, which posted losses of SwKr2.33bn (£173m) in bad loans in the first half of 2024, attributed the cuts to efficiency gains from adopting AI. Klarna noted: “Our proven efficiencies at scale have been improved by our investment in AI, reducing operating costs and improving gross profit.”
With offices in London and Manchester, Klarna operates globally in Europe, America, Australia and New Zealand. While the company declined to reveal its UK workforce, it confirmed that job cuts would be spread evenly across its sites.
AI already plays an important role in Klarna’s operations, especially in customer service, where chatbot technology has replaced the equivalent work of 700 employees. Klarna’s workforce has shrunk from 5,000 employees last year to 3,800, with a further decline to around 2,000 expected in the coming years.
Founder and CEO Sebastian Siemiatkowski suggested an IPO could happen next year, although no firm commitment was made. London is a potential location for the IPO, although New York remains a more likely option.
Klarna’s credit losses rose 39% year-on-year, partly due to a 16% increase in gross transaction value to SwKr523 billion (£39 billion). The closely watched credit loss rate has risen from 0.37% to 0.45%, although the company insists the trend is ‘stable’ and linked to rapid expansion in the US.
Despite rising credit losses, Klarna reported significant financial improvements, with pre-tax losses falling 86% to SwKr262m (£19.4m) in the first half of 2024. The company highlighted that it performed near breakeven in the second quarter as evidence of progress.
Once Europe’s highest valued fintech, Klarna’s fortunes took a hit in 2022 when a funding round cut its valuation to $6.7 billion from a previous peak of $45.6 billion.
Under the BNPL arrangements, Klarna finances purchases on behalf of consumers and offers them up to 60 days of interest-free credit. The company bears the risk of borrower defaults and charges late payments to consumers who miss their payments. Repeated delinquencies can lead to credit agency reports, debt collections, or, in rare cases, debt sales.
With 575,000 affiliated merchants in 45 countries and 31 million monthly users worldwide, Klarna remains a dominant force in the BNPL market, but its rapid transformation signals AI’s growing influence in reshaping the future of financial services.