Swedish multinational fintech Klarna is making its mark in retail banking with an expansion of its product range.
The company, which has built up a strong leadership position in the buy now, pay later (BNPL) sector, has announced the Klarna balance and cashback features. This adds two traditional retail banking services to its existing product range.
Klarna balance will allow users to store money in their account, with funds added directly from a customer’s bank account. The cashback feature will see Klarna shoppers at participating retailers earn percentage points, with the money stored in their balance.
The features have been launched in 12 countries, including the US, with the remaining markets being in Europe. Klarna asserts that the addition of the new services falls in line with its mission to disrupt retail banking and become what it calls “an everyday spending partner to the world’s consumers”.
Sebastian Siemiatkowski, Co-Founder and CEO of Klarna, said: “Klarna owes everything to our loyal network of millions of consumers. These new products make it easier for customers to manage multiple scheduled payments, helping our customers use Klarna for more frequent purchases and driving loyalty.
“We are already one of the most trusted brands in financial services and we want to build on that to support all consumers with their everyday spending. Today’s launches are a major step forward, allowing consumers to earn money while they shop and manage it in a Klarna account.”
Klarna stepping up its efforts in retail banking demonstrates the increasingly prominent role challenger and alternative banks are playing in the global sector. In the UK, for example, Monzo has been going from strength-to-strength, whilst Revolut recently ended its long-running search for a UK banking licence.
In Klarna’s case, the balance and cashback features follow the US launch of its Klarna Card in April, having already been rolled out in Sweden, Germany and the UK. Klarna brands the card as offering a more sustainable option for customers, as opposed to high-cost credit cards.
As stated above, Klarna’s flagship offering over recent years has been its BNPL product. The popularity of this service in Europe, and increasingly in the US, has driven good financial returns for the company, with its Q1 2024 revenue up 29% year-over-year at SEK 6.4bn (€558m).
The rise in BNPL has not gone unnoticed by legislators and regulators, however. The UK government is evaluating how to regulate the space, whilst authorities in the US and Australia are moving to classify BNPL products as a form of credit.
These developments have not deterred Klarna’s ambitions. The firm recently offloaded its checkout businesses to streamline its focus on its payments offering, and is reportedly considering a secondary listing of shares to support its stateside growth plans.
