Financial technology firm Klarna is making waves in the banking industry with the introduction of new products that aim to disrupt traditional retail banking. The company, known for its buy now, pay later loans, is expanding its offerings to include a checking account-like product and a cashback program.
Klarna’s CEO and founder, Sebastian Siemiatkowski, highlighted the company’s goal of supporting consumers in managing their everyday spending. By offering a bank-like personal account and a cashback program, Klarna aims to incentivize customers to use its platform for their financial needs. This strategic move not only encourages loyalty but also drives more frequent purchases.
The new products, named “balance” and “cashback,” cater to users in 12 markets, including the U.S. and Europe. Klarna balance allows users to store money in a personal account for instant purchases and loan payments. Additionally, refunds for returned items can be received directly into the Klarna balance. On the other hand, the cashback program rewards customers with up to 10% of their purchases at select retailers, with the earnings automatically stored in their balance account.
While Klarna has previously offered checking accounts and savings products in Germany, the company is now expanding these services to other markets. Customers in the EU, where Klarna holds a bank license, have the opportunity to earn interest on their deposits, whereas U.S. customers do not have this option. This expansion marks a significant step in Klarna’s evolution as it moves closer to a potential IPO.
Klarna’s plans for an initial public offering (IPO) have generated speculation and excitement in the financial market. While the timeline for the IPO remains uncertain, Siemiatkowski expressed the company’s interest in going public in the near future. In the meantime, Klarna is exploring options for a secondary share sale to provide liquidity to its employees.
According to sources familiar with the matter, Klarna’s valuation in the secondary market is currently in the high-teen billions. This strong market position reflects investors’ confidence in Klarna’s growth potential and innovative banking products. As the company continues to expand its offerings and reach more customers, its valuation is expected to rise further.
Klarna’s foray into banking with new products like balance and cashback demonstrates its commitment to revolutionizing the financial services industry. By offering innovative solutions that cater to consumers’ needs and preferences, Klarna is well-positioned to drive growth and capture market share in the competitive banking sector. With a potential IPO on the horizon and a strong valuation in the market, Klarna’s future looks promising as it continues to disrupt traditional banking models.