Klarna secures UK licence for expanded financial services

In 2023, the Swedish fintech company Klarna obtained an electronic money institution licence from the UK's Financial Conduct Authority. This crucial authorisation enables Klarna to extend its services beyond its traditional buy now, pay later (BNPL) offerings, allowing it to introduce a debit card and provide UK customers with Klarna accounts for saving funds. Klarna's head of Financial Services UK, Abby Vickers, emphasized that this step represents a significant shift in Klarna's strategy, aiming to position the company as a modern alternative to traditional banking options. The new products will cater to consumers seeking more comprehensive financial management tools. For Klarna, this expansion comes after a tumultuous period that saw its valuation plummet from $46 billion in 2021 to a considerable decline in 2022, as it grappled with changing market conditions and rising interest rates. Following these challenges, the company recorded a substantial loss of $99 million in the first quarter of 2025, which raised concerns about its business model amid increasing customer credit losses of 17% compared to the previous year. The decline in valuation and financial struggles reflected the broader industry issues impacting many fintech firms. Establishing a new UK-based entity was a pivotal reaction to the post-Brexit regulations that affected many companies operating in the UK. Klarna Bank AB transitioned from its temporary permissions regime to a fully regulated entity to provide consumer services in the UK. As the competition in the financial space intensifies, Klarna aims to differentiate itself from established digital banks like Revolut and Monzo, catering to tech-savvy consumers looking for efficient ways to manage their spending and savings. By acquiring this new license, Klarna positions itself favorably to further disrupt the retail banking sector and enhance customer engagement. As part of its evolution, Klarna is gearing up for a potential IPO in New York, marking its second attempt to go public after an earlier attempt was thwarted due to market instability linked to geopolitical factors. The fintech’s efforts to pivot away from a narrow product focus have intensified, with the goal of reigniting investor confidence amid rising scrutiny over its long-term viability. The move away from BNPL to encompass everyday financial management illustrates Klarna's determination to redefine its role as an integrated financial solution provider that prioritizes customer-centric financial health.