Financial technology firm Klarna has recently made a bold move by expanding its services into the banking sector. The company, which is well-known for its buy now, pay later loans, has introduced new products that aim to disrupt retail banking and provide customers with more convenient ways to manage their money.
Klarna’s New Products
One of the key new products offered by Klarna is the “balance,” which functions as a bank-like personal account. Users can store money in this account and use it to make instant purchases or pay off their buy now, pay later loans. Additionally, refunds for returned items can be directly deposited into the Klarna balance, simplifying the process for users.
Another new offering from Klarna is the “cashback” feature, which rewards customers for shopping through its app. Users have the opportunity to earn up to 10% cashback on purchases made at participating retailers. The cashback rewards are automatically stored in the user’s balance account, making it easy to track and manage earnings.
While Klarna initially made its mark in the fintech space, the company has been gradually expanding into traditional banking services. In Germany, Klarna has been offering checking accounts and savings products since 2021. The company now plans to extend these banking products to other markets as well.
In the EU, where Klarna holds an official bank license, customers can earn up to 3.58% interest on their deposits. However, customers in the U.S. will not have the opportunity to earn interest on their deposits. This move marks a significant shift for Klarna as it broadens its product range and establishes itself as a formidable player in the banking industry.
Klarna’s foray into the banking sector comes at a crucial time as the company edges closer to an anticipated IPO in the U.S. While no fixed timeline has been set for the stock market listing, Klarna’s CEO and founder, Sebastian Siemiatkowski, recently expressed the company’s interest in going public. In the meantime, Klarna is exploring options for a secondary share sale to provide liquidity for its employees.
Klarna’s valuation on the open secondary market is currently in the high-teen billions, indicating strong investor interest in the company. Despite the uncertainties surrounding the IPO timeline, Klarna remains committed to its goal of becoming a publicly traded company in the near future.
Klarna’s expansion into the banking industry with its new products signifies a major milestone for the company. By offering customers more financial services and incentives to use its platform, Klarna is positioning itself as a comprehensive financial solution for consumers. As the company navigates the path to an IPO and continues to innovate in the banking sector, it will be interesting to see how Klarna shapes the future of finance with its disruptive approach.