The CEO of Klarna reflects on a vision from ten years ago about the future of retail banking, where a digital financial assistant would analyze a customer’s spending, such as their mortgage, and automatically find better offers. This assistant would handle all the paperwork and save the customer money with minimal effort on their part. The CEO compares this future to the development of self-driving cars—uncertain in timing but inevitable—and believes it will profoundly impact the banking industry by increasing customer mobility and competition.
Currently, banks face little pressure to be competitive because switching providers is difficult and requires transferring data, which discourages customers from moving. However, with the advent of digital financial assistants, customers will switch to whichever institution offers the most value for the least cost. This shift will drive down the excess profits that retail banks currently enjoy, fundamentally changing the industry’s landscape.
The CEO also discusses the broader implications of artificial intelligence and automation on the workforce, particularly knowledge work. He points out that many jobs, such as translators in Brussels, could be largely automated today, reducing the need for human workers in those roles. While new jobs will emerge, the transition period will be challenging for many workers who cannot easily switch careers, highlighting the need for societal support mechanisms during this shift.
From Klarna’s perspective, the company has already experienced significant changes by leveraging technology. Over the past two years, they have increased revenue per employee from $400,000 to over $1,000,000 while reducing their workforce from 7,400 to 3,000 employees. Despite this reduction, the company has grown in revenue and customer base, choosing not to lay off employees but instead reinvesting payroll savings into higher compensation for remaining staff, who benefit from the internal use of AI.
Ultimately, the CEO emphasizes that the goal is to maximize value for customers by adopting new technologies. While acknowledging the societal challenges posed by automation and AI, he believes companies must embrace these tools to remain competitive and efficient. The changes will have wide-reaching effects on knowledge-based work, and society will need to adapt to support workers through this massive shift.
