Klarna, the buy now, pay later (BNPL) giant, has made a significant move by replacing 1,200 roles with AI, with further reductions anticipated. The Stockholm-based fintech company has adopted an “attrition” downsizing model, in which roles left vacant by departing employees are not filled by new hires but are instead automated.
This approach is part of Klarna’s broader strategy to harness artificial intelligence in order to streamline its operations and increase efficiency. The company emphasised that these reductions were not the result of layoffs but rather a shift in how work is managed. A spokesperson for Klarna noted that while roles are being phased out, the engineering department has been least affected by the changes.
AI Replacing Roles Across the Company
Klarna has confirmed that the AI-driven role reduction is taking place across all its locations, including its UK offices, although the company declined to specify how many positions in the UK would be impacted. Klarna’s decision to rely more on AI comes at a time when many businesses are seeking to reduce operational costs while preparing for potential public listings.
The company’s recent financial performance has reflected a shift in fortunes. In its latest reports, Klarna posted half-year profits of £48.3m, a stark contrast to the £33.3m loss it recorded during the same period the previous year. This growth is part of the company’s broader efforts to cut expenses and boost revenues through AI.
Plans for Public Launch and UK Expansion
Klarna has been gearing up for a potential public launch, and its investment in AI seems to be a key factor in positioning itself for this. Last year, Klarna established a UK holding company, indicating a focus on attracting international investors via the UK’s financial and regulatory framework. While the holding company signals Klarna’s confidence in the UK market, the company has not confirmed whether the eventual IPO will take place in London.
Impact on the BNPL Sector and Regulatory Focus
Klarna’s BNPL services allow consumers to break their purchases into instalments over time. As BNPL continues to grow in popularity, it has also attracted the attention of regulators. The Labour Party raised concerns over the regulation of BNPL services in the lead-up to the July general election. Since then, the appointment of Tulip Siddiq as Economic Secretary to the Treasury has reinforced expectations for stronger oversight of the sector, though no formal action has yet been taken.
Klarna’s decision to replace roles with AI is a major step forward in its efforts to cut costs and boost its business model. As the fintech industry evolves, Klarna’s strategic use of AI and automation could pave the way for similar moves across the sector, reshaping how companies manage their workforce and prepare for growth.
