AI's Impact on Jobs and Financial Services Industry

Klarna's AI-driven productivity boosts revenue and threatens traditional banking.

### Embracing AI: Transforming Jobs and Financial Landscapes
* 🤖 The speaker emphasizes a strong belief in AI's ability to perform jobs traditionally held by humans, suggesting that **productivity could be limitless** with the right application of technology.
* 💼 In a strategic move, the speaker discusses the decision to **replace roles such as CEO and banker with AI**, indicating a desire to **lead by example** in the transformation of the workforce.
* 📉 The company has reduced its workforce from **4,500 to 3,500** over the past year, attributing this to natural attrition and a hiring freeze, while also assuring employees that salary costs will shrink but paychecks may **increase due to improved efficiency**.
* 💡 The speaker highlights that AI applications have been beneficial across various departments, with a core group of **200 employees effectively utilizing AI** for tasks like **automation, financial analysis, and product development**.
* 📈 The company has seen a **23% increase in revenue**, with healthy margins in both the U.S. and European markets, and a shift towards **buy now, pay later options**, which have increased by approximately **24-25%**.
* 💳 With a **$1 trillion credit card market opportunity** and **$1.3 trillion in credit card debt** in the U.S., the speaker notes that their business model presents a **healthier alternative for consumers**, saving them **over $2 billion in interest payments**.
* 🇺🇸 Discussing regulatory perspectives, the speaker expresses a desire for **competition in the banking sector** and suggests that while some regulation is necessary, it should **not stifle innovation in AI development**.
* 📜 The speaker advocates for sensible regulations, such as **transparency in AI communications**, while urging caution against premature regulations that could **hinder technological advancements**.

Look, I actually want to signal how you're all in on AI. We actually just saw, what was it, two weeks ago? You updated the market as to your financials using not you, but a generated version of you. What are you trying to signal here?

That productivity can just be limitless? I think it can, actually. I am of the opinion that AI can already do all of the jobs that we, as humans, do. It's just a question of how we apply it and use it. But I think also, to some degree, this

part of doing the CEO was because when I met Sam and talked to him for the first time about this, I said, 'Look, a lot of jobs are going to be threatened, and what are the jobs that people like the least? It's lawyers, CEOs, and bankers.'

And I happened to be both CEO and banker. So I said, 'Let's replace our jobs first,' and this is going to become more popular than if it replaces other jobs. So it's—we're trying to play into that narrative. We've already played into that narrative

by articulating how many customer service reps ultimately you don't have to hire going forward. You seem pretty easygoing about replacing yourself, but how do your employees feel? Well, I think what we've done internally, which hasn't been reported as widely, is we

stopped hiring about a year ago, so we were 4500 and now we're 3500. We have natural attrition like every tech company. So people stay about five years. So 20% leave every year. And by not hiring, we're simply shrinking, right?

What we've said to our employees, though, is that the total salary cost for clients will shrink. But employees will see some of the gains in their paychecks. We'll share some of the improvements in efficiency.

This will be done by increasing the rate at which employee salaries increase. This is because of the consistent messaging from myself and management for the last year. People at Tom Nixon are rallying to deploy as much

efficiency as possible because it directly impacts their equity and cash compensation. Besides customer service, where else have you seen the benefits in your talent stack? Has it really benefited?

No, it's across the board. You can use it for so many different use cases. In our company, with 3500 employees, I'd say there's a core group of 200 who have really

learned how to apply it practically to deploy it for various purposes: automation improvements, generating images and videos, marketing materials, running financial analysis, interpreting customer needs and demands, product development, and assisting engineering.

There are endless opportunities right now to deploy it for moving faster and accelerating the business. You filed confidentially with the SEC ahead of an IPO, so I won't ask you to comment on that. But you have been guiding us on how

Much you've seen an increase in revenue, 23%. Your air generates itself, you told us, but there's still a very small loss. Does that—is it productivity gains that help you get to ultimate profitability, too? It will be part of that, but it's also growth.

I mean, we have a very healthy margin now in our US business. We have a very healthy margin in our European business. So as that continues to grow, that also obviously helps accelerate the profit making. And we're seeing a great uptick in buy

now, pay later in the US. I think it was reported now during, you know, Black Friday and so forth that credit card sales were up 11%. Buy now, pay later was up about 24, 25%. So there's a major shift going on away from credit cards towards buy now, pay

later in the U.S., I mean, everywhere. And when you click on a website and try to pay, when you're on Apple Pay, you're doing deals with, well, pay, for example. How much more is there to bring in in

It's amazing. I mean, there's two things. First, the credit card industry is a $1 trillion market opportunity, and we're still a tiny, tiny piece of that. But more importantly, you know, in the

US, there's $1.3 trillion of credit card debt. People pay $120 billion in interest this year. And we calculated that the consumers that have used Klarna by having interest-free payments have saved over $2 billion in the last few years by using Klarna.

instead of credit cards.
So this business model is going to present a serious threat to incumbent banks and credit card companies because it is a more healthy alternative for consumers and drives credit with zero interest for them.
Right. I'm sure they love that.
I know that you've felt that they've

come after you in some way, but you're looking towards a new administration here in the United States.
How supportive do you think they will be of this?
I know you've had some interesting takes on some of Trump's promises.
Yeah. Well, first and foremost, I

thought it was interesting that as much as Trump has been talking about deregulation and removal of regulations, there was one thing he said in the opposite direction, which was, you know, during the campaign,
he said we should put an interest rate

cap on credit card fees at 10%.
And I think Bernie Sanders jumped on it and said, "Oh, we want to hold him accountable to that." So it was a great thing.
In a lot of European markets, there is a

20% cap, for example, on interest rates, or even lower. Here in the US, the average interest rate on credit cards is 24%, so much higher than that.
Now, I think that's what's interesting to me.
But then he also announced recently

that, you know, if you invest $1,000,000,000 in the US, we can accelerate licensing and so forth.
As a bank in Europe, we want to become a bank in the US.
We want to speed up our money

transfer. Licenses, applications. We are more than happy to take Trump's and actually do that billion-dollar commitment to the US market because it's so large. We want to accelerate and we want to create real competition. You can cap interest rates as one potential way to get away from this

tremendous cost to society that credit cards present, or we can create more competition, and we're happy to come in and increase competition even more. And I mean, we started on—I will end on a—because we have got, you know, the

LinkedIn post, which actually was put out by your CMO, talking about how you are using this generative AI version of yourself to update us on your numbers. Do you think the regulation is there for generative AI as well in the US versus

Europe? I mean, give us your take on Europe as a global company. That's you, but not you. Exactly. Look, I think that the challenge is, unfortunately, that Europe has taken a different path where they want to

regulate before they know what to regulate. While in the US, we've had the, you know, the preference of, you know, let's let it play out a little bit and see whether it needs to be regulated. I think in general, like, you know, I am—I'm not an anarchist.

I think some rules are helpful. But in general, obviously you want to give—and we need to make sure that the democratic world is ahead in the development of AI from the non-democratic worlds. It's very important that we continue supporting it and don't overregulate it.

Too early.
There are a few simple things that one should do, and a simple rule that we've suggested in Brussels is maybe it should be legally obliged that if you communicate with someone on the screen, at least you have to tell if it's an AI or a human.

Like, there are basic rules, and obviously people would follow that anyway. And people can, you know...
But there are basic rules that we can apply that could make common sense, that could make sense to pursue already.
But other than that, I would be on the

on the side of, like, please keep it.
Allow us to innovate and push the envelope and see what the technology can do before we jump into regulating.

Klarna CEO on US Banking Ambitions

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Bloomberg Technology

CEO uses AI-generated version for financial updates, signaling limitless productivity potential.

CEO believes AI can perform all human jobs, focusing on application and usage.

CEO targeted jobs like lawyers, CEOs, and bankers for AI replacement due to perceived unpopularity.

Company aims to leverage narrative of AI replacing jobs, starting with customer service representatives.

Company reduced workforce by 1000 employees through attrition and hiring freeze.

Company plans to share efficiency gains with employees through increased salary growth.

AI benefits seen across the board, not limited to customer service.

A core group of 200 employees actively use AI for various tasks.

AI applications include automation, content creation, financial analysis, and product development.

Financial performance and future prospects

Company reports 23% revenue increase, despite still having a small loss.

Profitability will be driven by productivity gains and growth.

Healthy margins in US and European businesses contribute to profit acceleration.

Significant shift towards buy now, pay later, surpassing credit card growth.

Large market opportunity in the credit card industry, with potential to disrupt existing players.

Klarna users saved over $2 billion through interest-free payments compared to credit cards.

Discussion on potential support from the new US administration regarding financial regulations.

Trump's suggestion of a credit card interest rate cap is highlighted.

Trump's proposal for accelerated licensing with significant investment is discussed.

Company expresses willingness to invest in the US market to increase competition.

Comparison of AI regulation approaches in the US and Europe.

Europe's approach is characterized by regulating before fully understanding the technology.

CEO advocates for a balance between regulation and innovation to maintain global AI leadership.

Simple regulations, such as disclosure of AI communication, are suggested.

Preference for allowing innovation before implementing extensive regulation.