Klarna chief executive Sebastian Siemiatkowski claims that a long term shift towards providing customers with better value products will concentrate the banking market into five or so very large global players.
Siemiatkowski said he didn’t know when it is going to happen, just that it will happen and that ultimately it will mean “dramatic change for financial services,” at the Innovate Global Summit.
“Klarna has pivoted its business a couple of times but the trajectory and journey we’re on right now comes from this one type of insight that we had. We sat down and said, what are financial services going to look like in the future?,” he said.
“The conclusion was one day you wake up and your computer tells you, hey, I’ve analysed your mortgage, and I realised that you can save £10 pounds by just switching and the only thing you need to do is say yes, and that’s us,” he said.
Siemiatkowski has plans to use open banking to pivot his business further over the long term that go beyond the so called ‘super app’ strategy of adding in new financial products over time, according to a report from Altfi.
He said that a change was necessary in order to make the financial sector work better for consumers.
“Why I know financial services and banking is not functioning for consumers, I just need to look at the profits of all the big banks to understand that it is not working,” he said.
“We are going to move towards a market with less profits where financial services will truly serve consumers,” he added.
Siemiatkowski told investors that “this industry will shrink”.
“This industry, all of us, have taxed society too much money for services that don’t actually benefit society, to the extent that they cost,” he added.
He hopes that Klarna will have a larger slice of a smaller pie once the change occurs.
“We are trying to create an alternative to traditional banking services in real time,” he said while also admitting that while soaring inflation rates and the war in Ukraine had impacted the sector, he did not believe if would affect the change.
Siemiatkowski said that the definition of a successful bank will not be returns on assets or return on equity but instead banks and other financial services firms should be focused on technology and software, and the ability “to take the data that consumers have chosen to share and turn it into value for them.”
“To make their lives easier, make them save time, make them save money, make them less worried about their finances, that’s going to be where we go.”