Fintech unicorn Klarna to cut 10% of staff amid global shocks

Fintech unicorn to slash jobs in reaction to global economic shocks signalling challenges in the financial technology sector

Swedish fintech unicorn Klarna is making swingeing cuts to staff in reaction to global shocks, with some 10% of jobs at the company at risk, according to reports.

In an announcement to staff revealed by website Breakit, CEO Sebastian Siemiatkowski said the “buy now, pay later” focused fintech had made tough decisions, with reports that 10% of staff could be layed off.

“We are strongly influenced by the outside world. When we set our goals for 2022 in the autumn, it was a very different world than the one we have today,” he said. “More than ever, we need to show laser focus on what really makes us successful in the future.”

Siemiatkowski told staff that senior management had faced some of the toughest decisions it had ever had to take. “Together, we have re-evaluated the organisation to ensure that we can continue to deliver on our ambitious goals,” he said. “We have done this evaluation based on two things – we have the right team that focuses on the right things, and we have the right people in the right place.”

Founded in 2005, Stockholm-based Klarna is one of a number of startups described as unicorns – meaning it has a valuation of more than $1bn. It is best known for providing “buy now, pay later” payment services to online retailers, enabling consumers to take advantage of interest-free finance.

It received a full European Union banking licence from Finansinspektionen in 2017 and has since spread its business and expanded its portfolio.

The layoffs could be a sign of job cuts to come across the fintech sector as recession looms. These tech startups are able to quickly recruit or cut staff in reaction to business challenges.

David Beard, founder of Lendingexpert.co.uk, said “the writing is on the wall for a recession” and that he expects more fintechs to make job cuts. “This news is a sign of the times – consumers aren’t spending in the ways Klarna had hoped, and I wouldn’t be surprised if we see other lenders follow suit,” he said.

Ruth Wandhöfer, partner at fintech venture capital firm Gauss Ventures, said consumer- and retail-focused fintechs will need to be very conscious of the overall economic situation as consumers are starting to feel the implications of inflation and the adverse economic conditions due to the war in Ukraine.

“In fact, every business will feel the impact of these forces, but some fintechs will also be well positioned with their offerings, particularly if those look to help consumers in better managing their finances, as well as providing more efficient and cheaper solutions, including payment services,” she said.

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