Klarna Seeks Green Light to Become a US-Chartered Bank

Klarna has become the latest FinTech aiming to become a regulated U.S. bank.

The Swedish company announced Monday (July 6) that it had applied to the Utah Department of Financial Institutions and the Federal Deposit Insurance Corporation (FDIC) to establish Klarna Bank USA, its proposed Utah-chartered industrial bank.

“Banking is built on trust,” Sebastian Siemiatkowski, co-founder and CEO of Klarna, said in a news release.

“We’ve seen firsthand the appetite for a fairer, more transparent approach in the U.S., and our own banking license is the natural next step, giving customers tools to borrow responsibly and build financial confidence, while bringing greater competition, innovation, and choice to consumers and merchants alike.”

Klarna, known for its buy now, pay later (BNPL) services, has been licensed as a bank in Europe since 2017, and offers banking services in the U.S. through a network of partners.

The company says a charter would allow Klarna to bring its “existing banking operations in-house,” providing greater reliability in areas like payments, savings, credit and merchant services, while supporting sustainable growth.

“For consumers, the result is a different kind of bank: transparent, safe, and free of hidden fees, with digital tools and traditional banking products in one place,” the release added.

Klarna says it has chosen Gary Harding to serve as president and chief executive of the proposed bank. He has more than a decade of executive experience in the U.S. financial sector, serving as chairman/CEO of Milestone Bank, and president/CEO of Prime Alliance Bank.

This is happening amid a growth in interest among FinTechs in new banking charters, following several years of muted activity, as PYMNTS wrote recently.

“Organizers continue to pursue de novo institutions for a variety of business models, reflecting a broader view among some FinTechs that direct federal supervision can offer greater long-term control than relying exclusively on sponsor-bank relationships,” that report said.

Meanwhile, the Office of the Comptroller of the Currency (OCC) recently issued new guidance that could lift one of the biggest obstacles to FinTechs considering becoming banks: understanding which regulatory standards have hindered other applicants.

The regulator issued new guidance recently which says it plans to make denial decisions public so the industry can get a better handle on how the OCC applies its standards