Klarna boss says AI has let it cut workforce in half and boost staff pay

The boss of Klarna has said artificial intelligence (AI) has allowed it to cut its workforce in half and stop hiring, as he predicted the technology will spell the end to “excessive profits” in the banking industry.

Sebastian Siemiatkowski, co-founder and chief executive of the buy now, pay later giant, said he was trying to be more “honest” on the topic than others in his position.

Speaking in an interview to Bloomberg Television, the boss said: “I feel there is a massive shift coming to knowledge work – and it’s not just in banking, it’s in society at large.”

“I think society is going to have to figure out what are we going to do,” he said, adding that while jobs will be created in the future, there will be a short-term impact on roles like translators which he said can largely be done by AI.

Mr Siemiatkowski said Klarna had shrunk its workforce from 7,400 people to about 3,000, while at the same time growing revenues and customers.

“So, we’re simply not recruiting, which means that we can avoid doing lay-offs,” he told the news channel.

“We have taken a lot of the savings from the payroll costs and reinvested that into the acceleration of the compensation of our employees, which means they are seeing a huge benefit of our supplying AI internally.”

Mr Siemiatkowski stressed he still sees “concerns for society” about the adoption of the technology, particularly in the hands of non-democratic countries.

But he added: “Overall, it is good for society, it means less excess profits in what has been not as well-functioning markets as they could have been.”

Klarna launched its shares on the New York Stock Exchange last month in what was one of the biggest flotations to occur this year.

The 20-year old business says it is used by some 111 million customers globally, with its flexible payment options offered by retailers at checkouts including John Lewis, Asos, Argos, Ticketmaster and Booking.com.

Mr Siemiatkowski’s remarks come after the Bank of England warned earlier this week of a growing risk that a global AI bubble could burst.

The Bank said AI tech firms with soaring valuations were vulnerable to the risk of a “sharp market correction”, especially if there is “disappointing” progress on the development and adoption of the technology.