In today’s post, I’ll cover:

  • Klarna’s journey with AI - how they (very) quickly focused on being ‘AI-powered’ internally and in their product
  • Their recent Annual Report’s mention of AI and how it’s changing their business
  • AI’s impact on taking jobs at Klarna

I received an anonymous tip from an ex-Klarna employee in December 2023:

Their medium to long-term bet is that they can drastically reduce the headcount of the company using AI.

They're using layoffs as well as natural attrition as a way to work AI into how the company operates. Not the product, but their ways of working.

If someone leaves a team, the management has said "figure out how to use AI to make it work without them" forcing teams to work smarter.

Fast-forward to today:

Klarna today announced its AI assistant powered by OpenAI. Now live globally for 1 month, the numbers speak for themselves:

The AI assistant has had 2.3 million conversations, two-thirds of Klarna’s customer service chats

It is doing the equivalent work of 700 full-time agents

It is on par with human agents in regard to customer satisfaction score

It is more accurate in errand resolution, leading to a 25% drop in repeat inquiries

Customers now resolve their errands in less than 2 mins compared to 11 mins previously

It’s available in 23 markets, 24/7 and communicates in more than 35 languages

It’s estimated to drive a $40 million USD in profit improvement to Klarna in 2024

Those numbers really are something!

Some maths from folks on Twitter (X) suggest that 2.3M conversations with an average of 4 replies put the cost at delivering those messages could be ~$80k - $120k.

The CEO confirmed that it has required an investment of about $2-3M to create. So it’s unknown whether the cost of delivering those messages is included there or if it was just the cost to build.

The $40M in profit improvement is due to the difference in budgeted spending using their customer service provider with 3000 agents against the 700 less they need.

He also confirmed that:

this is not a co-pilot, this is AI performing and concluding the conversations and errands by itself.
before we took this live, we already had a co-pilot that helped customer service agents and other employees accelerate their work

The AI Assistant works by leveraging any content available on the website plus any other content the Klarna team added as a knowledge base. If a conversation doesn’t get a satisfactory reply, they create them.

This method is how many companies are building their AI support bots, including Deel which I covered previously.

We’ll dive into more numbers and the consequences of Klarna’s AI focus below.

Klarna’s journey with AI

Klarna was one of the early partners to develop a ChatGPT plugin (RIP) when they were announced on the 23rd of March 2023. It gave customers shopping ideas from a curated selection of items.

I’m super excited about our plugin with ChatGPT because it passes my ‘north star’ criteria that I call my ‘mom test’, i.e. would my mom understand and benefit from this

Klarna CEO


Klarna was referencing itself then as ‘a leading global retail bank, payments, and shopping service’.

April 2023, meeting the UK AI minister to discuss the UK’s leadership on AI.

30th of August, Klarna (now calling itself ‘the AI-powered payments network and shopping assistant’ - first mention was 18th of May 2023) was ‘the only bank among ChatGPT Enterprise launch customers’. ChatGPT Enterprise is essentially ChatGPT access for your team.

When I come to work, I focus solely on how AI can help us realize our vision faster,

2,500 of 5,000 Klarnauts (employees) had access to the API but this meant:

still only 50 percent of our employees use it daily. That's why we have to find new ways to get more people to use OpenAI’s fantastic tech,

“ChatGPT Enterprise will give everyone at Klarna access to the power of OpenAI”.

September 2023 the CEO posts this tweet signalling that they’ve been building something internally

After almost 8 months of exploring and innovating with AI, I wanted to share some of my learnings:

- Day-to-day testing and iteration is the best way to see how you can accelerate things

- You cannot understand anything without testing it yourself, it is the best way to really learn value

- There is immediate success in using AI to streamline Boring tasks

- AI can be quicker and more efficient in providing assessments that we may have missed under piles and piles of data points

December 2023 the CEO posted some wins on Twitter including:

Became AI-powered. We’re the first bank to launch ChatGPT Enterprise and now over half the organization uses AI automating mundane tasks and making us so much more efficient.

More than half the organization now uses AI. Although the claim was 50% using the API in August.

Digging into their Annual Report

In the recent 2023 report, AI was mentioned only 14 times—we’ll keep an eye on how that changes in the 2024 report.

Notes from the CEO. Again it was mentioned the number of employees that were using AI tools:

more than half of all Klarnauts use AI tools - many developed in-house by our own teams - on a day-to-day basis…

they are liberating themselves from repetitive administrative tasks, enabling them to focus on complex problems that only they can solve with their unique creativity and determination

Still ‘more than half’.

There is more focus on how AI is changing their efficiency, growth and financials.

While our mission at Klarna remains the same - to accelerate commerce and provide the best possible experience for our consumers and retailers - the introduction of AI is undoubtedly accelerating our progress. With a wealth of AI powered ideas in the pipeline, we’re excited about the next few years as we continue to evolve our vision of Klarna as a comprehensive personal financial digital assistant.

Notes from the CFO. Improving their operating result by 95% YoY:

2023 has served as a definitive testament to the agility of our business model. We executed our strategy, fostering sustainable growth, a significant increase in gross profit margin, and substantial efficiencies. This was achieved at the same time as implementing generative AI across the company, which continues to have a transformative impact on our business. As a result, we improved our adjusted operating result by 95% YoY in FY23.

Reducing operating expenses:

Klarna’s continued growth and scale, coupled with our focus on cost control and the strategic utilization of AI for enhancing productivity and efficiency, have positively impacted our operating leverage. We reduced operating expenses by -16% YoY, including G&A by -10%, technology and product development costs by -11% and customer service and operations by -14% YoY

Notes from the Board. Again cementing the AI-powered narrative of the company definition.

We are an AI powered global payments network and shopping assistant that accelerates commerce by offering fairer, more sustainable, innovative solutions

Touching on operating expenses (19.8B SEK is around $1.9Bn)

Total operating expenses before credit losses have decreased by 8% YoY to SEK 19.8B (FY22: SEK 21.5B) as Klarna harnessed the power of generative AI to drive productivity and efficiency gains.

And highlighting that they’re involved with pushing regulation:

We continue to actively engage with the Biden Administration and Congress to push for proportionate regulation of BNPL and benefits of AI in financial services.

You can also see how they’ve cut headcount over the years:

AI taking jobs

Firstly Klarna laid off ~10% (800 people) of the company in 2022 but said it was due to a change in investor sentiment. None of the people laid off were customer service agents.

Klarna doesn’t employ customer service agents. They outsource this to large customer service providers - they are not employees.

So of the 700 agents their AI Assistant replaces, none are Klarna employees.

They estimated the need for roughly 3000 agents but now need a little over 2000.

So with this new assistant, there are no layoffs (in the short-term).

In the short-term, there are no layoffs or implications for employees as a result of us launching this customer service AI chatbot.

Klarna has stopped hiring since October 2023 and is shrinking due to natural attrition. They’re trying to apply AI across all products, services and work they do.

This naturally has implications on how many people they need.

They are trying to be transparent with employees about this and that it is more about allowing them to do more with less.

Our ambition is to invest more per employee and to see the compensation of existing employees go up as we become a higher-revenue company.

Internally, lots of employees have been excited about AI and are applying it and Klarna, which is known as a leading AI company, which I think makes our workers more attractive to other employers

After looking at some recent Glassdoor reviews, there are a few mentions of Klarna being a great place for working with AI:

Amazing colleagues. Great opportunities to work with AI
Nice office, global workforce. AI focus.

Although the reviews still believe the pay is low.


While the numbers about their AI Assistant went wild around the internet, there is more to it.

  • The support reps were outsourced. Unfairly (?) people were pointing at Klarna yet again for reducing headcount.
  • They are trying to be early to try AI products for customers and internally changing their efficiency.
  • Truly more companies are going to be doing this, and Klarna is willing to be loud and early.
  • Support is a function of Klarna, not their main business so making this capital efficient means they can re-invest in other areas of their business.
  • How many employees are using AI internally at Klarna? It may always be ‘more than half’ 😂 - as much as I’ve poked fun at that, 50% is a big change for an organisation with thousands of employees. It’ll be interesting to see whether the natural attrition is folks in the bucket who aren’t using AI, and perhaps, don’t want to.
  • Should Klarnauts have been Klarnanauts?

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