Klarna’s CEO has warned fintechs and financial institutions that a rise in workforce automation through AI could cause a recession, despite slashing his headcount by 45%.
Sebastian Siemiatkowski joined the Times Tech podcast on June 5 to air his thoughts regarding the overuse of AI and its ability to replace physical workers and how he believes he can not see how the sector can avoid the increase.
“My suspicion is that there will be an implication for white-collar jobs. And when that happens, that usually leads to at least a recession in the short term,” he said. “And I think, unfortunately, I don’t see how we could avoid that with what’s happening from a technology perspective.”
Companies like Klarna have begun to decrease their employee base in favour of automation, particularly as AI technology becomes more sophisticated and can accelerate responses to customer queries.
The Buy Now, Pay Later (BNPL) firm cut its workforce from 5,500 to 3,000 in the last two years. In the same time frame, Klarna has increased its adoption of AI by integrating a shopping tool powered by a partnership with OpenAI to help shoppers with their shopping preferences.
More recently in February 2024, Klarna made the decision to replace up to 700 customer service staff with its new AI chatbot, a further indication of the Swedish fintech’s bullish ambition to leverage AI to automate the user experience.
Change of heart?
Siemiatkowski also acknowledged this shift to AI-only customer service has led to a decline in quality, prompting it to bring back human agents, but not as full-time employees.
“When we started applying AI in our customer service, we realised that there will be a higher value to human connection,” he said.
It appears the Klarna CEO is now experiencing a change of heart, as he told the Times Tech podcast that white-collar jobs are now under threat if companies like Google, Duolingo, and Ikea, continue to automate their workforces.
“Many people in the tech industry, especially CEOs, tend to downplay the consequences of AI on jobs, white-collar jobs in particular. I don’t want to be one of them,” said Siemiatkowski.
He continued to express concern over a potential recession due to the amount of workers being replaced by AI, explaining the “efficiencies” CEOs are looking for could result in a “seismic economic shift”.
An economic issue?
There is no doubt that US President Donald Trump’s tariff battle with the likes of China and Europe has fluctuated the economic market, evident when Klarna announced it would be pausing its US IPO due to market conditions.
But before Trump began to threaten countries with self-interested tariffs, the global economy had been recovering from a downward spiral due to Covid-19 and the fintech market began experiencing significantly less interest from investors.
Klarna was impacted greatly, seeing its valuation fall from $46bn to $6.5bn in the space of a year from 2021 to 2022.
During that time, Siemiatkowski cited macroeconomic conditions as a result of the valuation decline, and told the Times Tech podcast that “we are very insensitive to macroeconomic shifts” when it pertains to people losing their jobs.
This is why Klarna’s CEO is cautious over a potential recession, as he explained: “We can still see (macroeconomic shifts), but they’re much less profound than if you’re a big bank, you have tons of mortgages. And for people to really increase losses, credit losses, what has to happen is people have to lose jobs.”
While large financial entities may be prioritising cost cutting by favouring AI automation over physical human workloads, Siemiatkowski is learning from his own experience why this trend may be causing more harm than good.
