Klarna predicts AI's toll on jobs, India's payment rail boosts Walmart

Klarna on Tuesday said it has brought in an average of 73% more revenue per employee over the past 12 months, part of a broad push to use new forms of artificial intelligence at the Swedish financial institution. The impact of AI is also reducing the number of employees the company needs, news that will draw more attention to AI's role in  financial services employment.

The company has about 3,800 employees. Klarna CEO Sebastian Siemiatkowski told Reuters that AI's impact had contributed to cutting that headcount from about 5,000 a year ago. That reduction had come largely through attrition and not layoffs, Siemiatkowski said, adding further reductions to less than 3,000 were possible in coming years. In an email, Klarna's public relations office said, "We are not planning on cutting jobs. However, we are acknowledging that, due to the use of AI, we are not replacing those who decide to leave the business, so through natural attrition the business becomes smaller, but there are no redundancies."

The company, which is well-known outside of Sweden for buy now/pay later lending, reported that its profits were about $66 million for the quarter ended June 30, compared with a loss of about $68 million for the quarter ended June 30, 2023. Klarna, in the quarter ended Sept. 30, 2023, returned to profitability for the first time since 2019.

Klarna is adding financial products such as savings accounts in the U.S. and European markets as it prepares for a public listing in the U.S. in early 2025. That brings Klarna into more direct competition with PayPal, Block and U.S. banks, though payment analysts have said Klarna faces a challenge in convincing U.S. consumers that it offers more than buy now/pay later. As it attempts to diversify its products, Klarna is investing heavily in generative AI. Before Tuesday's release and the Reuters interview, Siemiatkowski had made several claims about generative AI, including that it performed the "work of 700 people," and said the company would not hire staff outside of engineering because AI can perform many tasks. Klarna has made gen AI available to all of its employees and said gen AI performs 66% of its customer engagements. —John Adams 

PhonePe this week reported a net profit of about $23 million for the fiscal year that ended March 31, up from a loss of about $7 billion the prior year, an improvement it attributed to payments processing and the impact of India's national payments system.

In recent months, the Walmart-owned PhonePe has added services beyond payments, such as insurance, merchant lending and wealth management.

PhonePe has a 48% share of transactions on India's United Payments Interface, the country's national payment rail, making PhonePe the largest UPI user. PhonePe has partnered with Google, another large UPI adopter, to export UPI's digital payments technology to other countries. That also gives Google Pay an outlet to offer digital payments via U.S. firms that sell to India, enabling Google to compete with U.S. payments firms that are also active there.

Walmart uses its ownership of PhonePe as a way to expand its financial services strategy in India, and to use India as a testing ground for payments technology that Walmart uses in its other markets. —John Adams 

Dutch payments company Adyen has hired Tom Adams to be its chief technology officer. Adams was previously head of engineering at Cash App, Block's peer-to-peer transfer app.

At Adyen, Adams will supervise payments, financial product development and data strategies. Adams joins Adyen in the midst of a technology overhaul. The company recently added Fastlane, a PayPal product that consumers use to store payment credentials over a network of merchants, enabling faster checkout.

Adyen has also added digital payments technology for both e-commerce and the physical point of sale as the Amsterdam-based company focuses on international growth in the U.S. and other markets outside of Europe. One of its competitors is Block, which retains its original Square brand for its merchant-facing business. Cash App plays a key role at Block, serving as a funding mechanism for the company's cryptocurrency business, and as an enrollment tool for both consumer and business clients at Block.

"As the financial services industry continues to digitize, and as we see shopper expectations continue to evolve, there is immense opportunity to drive innovation," Adams said in a release. Dutch regulators have approved Adams' appointment, as required by local law; and Adyen's board of directors will also need to approve his hiring. The date for that meeting was not released. Adams will replace Alexander Matthey, who will depart Adyen later this year. —John Adams