Since its UK launch in 2014, Swedish fintech company Klarna has grown exponentially. As of March 2022, Klarna partners with over 20,000 retailers in the UK, and has had over 16 million unique consumers using its services. “The UK, like Stockholm, is a real hub for fintech innovation, with many fintech companies clustered together in London, as well as in Manchester,” Alex Marsh, Head of Klarna UK says. “In addition to it being a very inspiring environment to work in, the talents and capabilities that we see in the UK have been very helpful for us in terms of building our own internal capabilities to drive forward our growth.”
Swedish fintech company Klarna was set up in 2005 by three friends at the Stockholm School of Economics. Around this time, online shopping was starting to become more popular, and Klarna set out to make it easier for consumers to shop and pay online. “We saw the same consumer trends across Europe, with people starting to do more shopping online at the same time as they were looking for better payment methods,” Alex Marsh, Head of Klarna UK, says.
“At Klarna, we wanted to bring a lot of the benefits of credit as a product when you are paying, without some of the nasty side effects that you see with traditional credit cards and other payment methods.” Klarna’s huge success on the Swedish market supported its international expansion and – fast forward 16 years – Klarna is Europe’s highest valued, privately held fintech company, recently valued at over a staggering USD 45.6bn, and active in 45 countries across the globe.
Physical presence is key
Klarna recently increased its physical presence in the UK by doubling its London office space and taking on a new office in Manchester. As part of its commitment to the UK market, it is also planning to double its UK headcount in the year ahead. “We see the UK as a strategic hub for Klarna. Having a physical presence here is key because it allows you to demonstrate first-hand the culture and focus that you have in your organisation – to let partners and clients understand who your organisation is. It also allows your organisation to understand the infrastructure of the country, its government and regulators and makes it easier to meet the standards in that market.”
Alex also emphasises that physical proximity to your partners facilitates collaboration. “It allows you to very quickly address opportunities and challenges, and to create the best ideas and solutions. We partner with merchants, technology providers, e-commerce platforms, system integrators, and so, being able to have those relationships and networks, and to build partnerships ultimately ends with the best outcome for the consumers. Many of the global retail companies that we partner with also have their headquarters in London and Manchester. Having a presence here has been hugely important to help support our global growth,” he says.
Very little disruption caused by Brexit
According to Klarna, the challenges posed by Brexit were relatively small and short-lived. “Obviously, the past 18 months have been very different due to the pandemic and Brexit. From a customer perspective, there was a short, bumpy period around the transition period where we saw challenges at UK borders, e.g. for goods moving in and out of the UK, and some of our customers who made purchases experienced delayed deliveries. Overall, we saw very little disruption though, and with the growth we have experienced, I see only opportunities ahead,” Alex says.
"Whether it is through the heritage of your company, through partners who you work with in your existing markets, or organisations such as the Swedish Chamber of Commerce, you might already have a presence in your future target market that can really help with those introductions and get you into the local ecosystem."
Future shaped by the pandemic
In 2020, Klarna saw a big shift in consumer behaviour due to the Covid-19 pandemic, with big trends that were already in motion being heavily accelerated. In the retail sector, more and more people were looking to make a shift to online shopping due to shops being closed. From a payment side, people were looking for flexibility and the ability to manage their finances whilst also avoiding interest and fees. “This led to many age groups, in particular those between 40 and 54, making their first purchases online. Using payments services such as those provided by Klarna, many people in the older age groups have also become more confident and comfortable shopping online, and we saw our customer base growing by over 60%,” Alex says.
Tips for businesses looking to expand to the UK
For anyone looking to expand to the UK, Alex stresses that having a physical presence is key. “I think having people on the ground, trying to get the best parts of your existing business and building out a local presence is really important to bring some of your culture and your offer to life through existing team members.”
Another lesson for Klarna has been to quickly build out your relationships in the market. “Whether it is through the heritage of your company, through partners who you work with in your existing markets or organisations such as the Swedish Chamber of Commerce, you might already have a presence in your future target market that can really help with those introductions and get you into the local ecosystem,” Alex says.
Alex mentions that Klarna has had a number of partnerships and relationships with trade associations for business organisations, both in the retail sector and in the financial sector, that they have found very helpful in terms of creating relationships and advice on how to navigate the UK market. “For instance, we are members of a trade association called ‘Innovate Finance’ that represents the UK’s global fintech community and they’ve been a huge help to us. The support we have gotten from the Swedish Chamber of Commerce has also been very important to us and our growth journey, and we see that relationship continuing,” Alex says.
Year of establishment
Sweden: 2005 / UK: 2014
Central Stockholm, Sweden UK offices London and Manchester
USD 45.6bn (£32.9bn)
Number of employees
7,000 in total, of which 200 in the UK