Klarna seeks U.S. bank charter in latest push beyond buy now, pay later

Klarna, the Swedish fintech company renowned for its buy now, pay later services, has taken a significant step towards expanding its operations in the United States. On Monday, the firm announced its application to both federal and state regulators to create a U.S. bank subsidiary. If granted, Klarna Bank USA will be a federally insured institution based in Utah. Leading this initiative will be Gary Harding, the former CEO of Milestone Bank and Prime Alliance Bank. Sebastian Siemiatkowski, co-founder and CEO of Klarna, emphasized the growing demand for a more equitable and transparent financial model in the U.S., stating that acquiring a banking license is a natural progression for the company. This strategic move is expected to empower customers with tools for responsible borrowing and enhance their financial confidence, while simultaneously fostering increased competition, innovation, and choices in the marketplace. Klarna’s decision reflects a broader trend among fintech companies, which are increasingly seeking their own banking charters rather than relying solely on partnerships with traditional banks. In a similar vein, in April, Mercury, another fintech firm, received conditional approval to launch its own banking operations. If Klarna’s application is successful, it will allow the company to internalize its banking services, thereby improving reliability in payments, credit, and merchant services. This latest application signifies Klarna's ambition to evolve from being merely a buy now, pay later service to a comprehensive consumer banking entity. Additionally, last month, Klarna rolled out high-yield savings accounts for U.S. customers, although these accounts are currently managed by its partner, WebBank. Owning a bank would enable Klarna to finance loans through customer deposits, offer checking accounts and credit cards directly, and reduce its dependence on third-party banking services. Currently, Klarna's shares are trading at approximately half of its initial public offering price of $40, following its public debut last September.