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Klarna’s participation in the UK’s burgeoning Open Banking space took a significant step forward this week when the firm launched Open Banking-backed powered settlements in the country. 

The Swedish-based company has built up a significant profile across the European consumer payments landscape via its buy now, pay later (BNPL) products. 

Its customer base includes 18 million British customers, and Klarna believes its Open Banking offering has significant UK potential due to the five million people in the country who use the technology.

The company’s Open Banking feature functions by enabling consumers to link personal bank accounts to a Klarna account and subsequently share bank data. Klarna will then use this data to inform its money lending decisions.

Wilko Klaassen, VP of Open Banking at Klarna, said: “Open banking offers a huge opportunity for Klarna to reduce the cost of payments to society by cutting out the established card payment networks, and using up-to-date bank account data to make ever better lending decisions. 

“This new launch builds on the success we have seen in 10 countries across Europe and will give UK open banking a major boost.”

Although this marks the launch of its UK Open Banking offering, Klarna has been making extensive use of the practice in other markets, having launched settlements for its Pay Now instant programme option. It has further plans to launch Pay in 30 and Pay in 3 later this year.

Open Banking has accelerated in use in the UK and its potential has been noted by a range of stakeholders including customers, fintechs, the traditional banking sector, the government, and other political actors.

Notably, the Crown Commercial Service’s (CCS) Dynamic Purchasing System (DPS) for Open Banking services has seen engagement with a range of financial firms. NatWest – which has been praising the benefits of Open Banking lately – became the first bank to join the DPS last month.

However, the government-commissioned Future of Payments Review, chaired by former Nationwide Chief Executive Joe Garner, outlined an urgent need for updates to the UK’s regulatory framework on Open Banking.