Klarna Froze Hiring Nearly a Year Ago Thanks to AI

Buy now, pay later company Klarna stopped hiring employees about a year ago. According to company leadership, the finance provider didn’t need to bring on new people thanks to artificial intelligence.

While AI did not lead to job cuts at Klarna, recruiting new talent has essentially ceased. Through natural attrition, the company lost about 3,500 workers, which helped its bottom line.

“There are specific jobs that are very clearly not going to be replaced, but I just don’t see the end of this,” CEO Sebastian Siemiatkowski told Yahoo! Finance.

Siemiatkowski noted that the BNPL fintech has about 200 employees currently using AI for tasks, according to Bloomberg. He even noted that employees support and encourage the use of AI for increased productivity. As efficiency improves, Klarna intends to raise worker pay accordingly.

Nearly a year ago, Klarna said it uses OpenAI to power its AI assistant, which the company claims can do the work of 700 full-time human agents. The first month the AI assistant went live, it handled over 2 million conversations — or roughly two out of three customer service chats for the company.

The Growth of BNPL Platforms Like Klarna

As consumers struggle to pay high-interest payments on credit cards or are unable to even get credit, BNPL services have taken up the slack. Over the next decade, the BNPL industry is projected to grow almost 22% annually, ultimately reaching about $80.2 billion in value.

Klarna is seeing and taking advantage of the trend. Siemiatkowski said over $120 billion in card interest was paid by consumers so far in 2024. Using interest-free financing through the company for purchases has saved its customers over $2 billion.

“This is a better alternative to credit cards, and that’s why you’re seeing buy now, pay later growing at a massive rate,” he told Yahoo Finance.

Now a privately held company, Klarna is possibly preparing for an initial public offering. Should the IPO happen, which could be as early as next year, current estimates say the company would be worth around $20 billion.

While currently a bank in Europe, Klarna hopes to significantly expand its presence in the U.S. The firm has around 85 million customers worldwide.