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European FinTech Giant Klarna Gains Full Banking License

Last Updated March 4, 2021 4:57 PM
Samburaj Das
Last Updated March 4, 2021 4:57 PM

Valued at over $2 billion, Swedish payments startup Klarna has been granted a full banking license from Finansinspektionen, Sweden’s Financial Supervisory Authority.

Founded in 2005, Stockholm-based Klarna is now the largest European FinTech company to gain a banking license after filing for one in late 2015. With over 60 million customers and €13 billion in transactions processed last year, Klarna is among the largest FinTech companies in Europe. In picking up the license, Klarna now has the means to offer a new range of core banking services for customers across Europe.

In statements, Klarna CEO Sebastian Siemiatkowski said:

This is another exciting milestone on the Klarna journey to become the world’s favourite way to buy but also for the European banking sector. We are now one of Europe’s largest banks with 6 0million customers, 70,000 merchants and working seamlessly across borders.

As things stand, Klarna’s primarily functions as a payment gateway and provider for e-commerce websites, with financing options made available to users for online purchases. According to the Financial Times, the Swedish payments giant is now looking at offering services such as bank cards, salary accounts and all-in-one digital wallets.

Fundamentally, the early FinTech startup is looking to disrupt Europe’s banking industry, particularly the retail banking sector. Having raised $376 million in funding  since its founding, Klarna is also already profitable.

“As the entire banking value chain is being challenged, the payments sector has seen the most profound transformation,” Siemiatkowski added. “Klarna has played a role in disrupting payment services for the better and now as a consumer-oriented, product driven and technology intensive bank, we have the tools to drive change in retail banking.”

To set itself apart from traditional banks, the executive identified solving the complexity in payments processing as the key, alongside a better customer experience.

Klarna is also set to legally change its name  to Klarna Bank, according to application documents filed at the Swedish Companies Registration Office.

Tellingly, Siemiatkowski sees the entire banking industry to see a fundamental transformation bought on by new financial technologies. If it weren’t for regulation, banks would already be doomed.

Speaking to FT, he added:

Banks are challenged. In the tech world, these companies get out competed very quickly if they don’t deliver. But due to regulation, banks with very old technology – and poor customer satisfaction – have been able to prevail.

Featured image from Shutterstock.