Klarna Boosts Banking Efforts as It Prepares to Go Public

Klarna is increasing its digital banking efforts as it prepares to go public again.

As the Financial Times (FT) reported Monday (June 27), the Swedish company has been branching out from the buy now, pay later (BNPL) products that were its core business, launching new products that place it in the digital banking category.

The report contends that this move is happening as Klarna is facing mounting pressure on the durability of its model amid possible customer downturn.

“Klarna’s pivot is not just about growth. It’s really survival in a market which is no longer a defensible position,” said Liam Evans, managing director at PwC.

Earlier this month, Klarna teamed with Visa to launch a debit card in the U.S., letting customers pay for purchases up front, rather than in installments.

The company also announced it was entering the mobile business, following in the path of neobanks like Nubank and Revolut. And after launching savings and deposits products in Germany, the company is doing the same now in the U.S., its biggest market.

The FT notes that Klarna has in recent weeks begun referring to itself as a neobank, after years of painting itself as an “AI-powered global payments network and shopping assistant.”

“With mobile plans we’re taking [saving customers time and money] one step further, as we continue to build our neobank offering,” co-founder and chief executive Sebastian Siemiatkowski said in a statement.

Klarna halted its initial public offering (IPO) plans after the White House’s  “liberation day” tariff announcements in April rocked the stock market.

Then came neobank Chime’s listing earlier this month. According to the FT, investors viewed this successful IPO as evidence that digital banks had reversed their long fundraising drought. Other digital banks, like Revolut and Monzo, have also recently raised their valuations.

“Klarna would have recently been keeping a close eye on Chime’s IPO success,” said Evans, adding that diversifying its business was a logical path for Klarna to appeal to investors.

PYMNTS wrote last month about the efforts by Klarna and its contemporaries to move beyond their “pay in 4” roots.

That report also noted research from PYMNTS Intelligence showing that 46% of Gen Z and 47% of millennials had used BNPL within the past year. Upwards of 40% of consumers said that if BNPL options were not offered, they would not make a purchase.

“The initial appeal of BNPL, a decade ago, may have resided with small-dollar transactions and lower-income consumers; now 6 in 10 of all U.S. consumers who use the payment method for convenience make at least $100,000 a year,” the report said.