After receiving huge media coverage, winning several awards and accolades and also receiving a full banking licence this year, it would be surprising if you have not yet heard of Swedish payment provider and SCC Member Klarna. Klarna was founded in 2005 with the aim of making it easier to shop online. Today, it is one of Europe’s fastest growing companies and it processes over 60 percent of all online purchases in Sweden. With 60 million customers now using Klarna to pay for online purchases with more than 70,000 merchants in 18 markets, it is fair to call the company a success story.
Klarna’s CEO and co-founder, Sebastian Siemiatkowski, spoke to the LINK about why the company is different to other payment providers, the challenges of growing quickly and why Sweden is so good at creating tech unicorns.
As a payment provider, Klarna is focusing on ensuring the smoothest end to end customer experience. This is the one key factor distinguishing Klarna from other payment providers according to its CEO. Siemiatkowski explained: “We work closely with our merchants to build a seamless digital consumer journey where the purchase experience itself must be frictionless. We also offer consumers the flexibility they desire in online shopping. For example, consumers can choose to only pay for their goods after delivery, allowing them to first see the goods they have chosen, then make a decision of whether to pay and keep it or make a return. Klarna assumes the entire risk for transactions and this means 100 percent payment guarantee for the merchant.”
In the 12 years of its existence, the company has grown from just a few employees to becoming one of Europe’s most highly valued tech start-up. One of the biggest challenges along the way according to Siemiatkowski has in fact been the pace of growth. He said: “We have grown so quickly that it has sometimes been hard to keep up! What is important is that we need to keep continually challenging ourselves in terms of innovation and product development. We cannot become complacent. It is not always about being the first to the market but is about being the best.”
In June this year, Klarna was granted a full banking licence by the Swedish Financial Supervisory Authority, making it one of Europe’s largest banks. Sebastian said that building a company that now has become a bank “definitely tops the list” of things he is most proud of professionally. But he added that although the banking licence will open even wider possibilities to expand Klarna’s product portfolio, the company will continue to do what it does best: “offer innovative consumer centric financial products focusing on making payments as smooth as possible”.
Klarna was not the first payment provider to receive a full banking licence and over the years, technology, including fintech, has changed the way consumers bank. Siemiatkowski said that how consumers interact with banks is definitely changing as are consumers preferences and expectations. He added: “I think in the future we will see increased specialisation, where consumers will use different service providers for different contexts and purposes.”
In fact, over the years, Klarna has been named and awarded as “a disruptive force”, a company that changes the traditional way an industry operates. This is something Klarna said they take some pride in.
Siemiatkowski added: “It is not about being disruptive for the sake of it but to truly bring something better to the market for consumers and merchants, which we believe we are doing.”
Klarna has also topped many lists of innovation and entrepreneurship over the years. It was named a “tech unicorn”, a company valued at over $1 billion in 2011. Sweden has now become famous for creating tech unicorns, something Siemiatkowski believe is partly down to “the strong educational system and general access to computers both in public schools and in peoples’ homes”. This has been a key enabler, he said and added: “The Swedish government made a great investment when subsidising home computers and providing fast internet access to the vast majority of the Swedish population in the 90s. In addition, Swedish companies tend to develop with an international outlook from the very beginning.”
For people who want to start their own company, Siemiatkowski advised that, “if you believe in your idea, persevere and don’t let other people tell you differently”.
When talking about what the future has in store for Klarna and what we can expect to see over the next years, Siemiatkowski said: “You will have to wait and see. What is absolutely sure is we will always keep true to smooth, simple and safe. That is as relevant today as it was in 2005.”