Klarna, the global digital bank and flexible payments provider, submitted applications to the Utah Department of Financial Institutions and the Federal Deposit Insurance Corporation (FDIC) to establish Klarna Bank USA, a Utah-chartered industrial bank. This move will allow Klarna to bring its existing US banking operations in-house, reducing reliance on banking partnerships and potentially lowering capital costs. The company hopes this will enable sustainable growth and offer a more transparent and competitive banking experience in the US.
Sebastian Siemiatkowski, Klarna's co-founder and CEO, stated that a US banking license is a natural next step to empower customers with tools to borrow responsibly and build financial confidence, while boosting competition and innovation. Klarna has been a licensed bank in Sweden since 2017, with that license extending to 23 other European countries. The company currently serves about 30 million US customers annually and has extended over $91.3 billion in credit since 2019, saving consumers more than $5.1 billion in interest compared to revolving credit card debt.
If approved, Klarna Bank USA will be a wholly owned subsidiary of Klarna Inc., insured by the FDIC, and will have its own independent board and governance. Gary Harding, former Chairman and CEO of Milestone Bank and former President and CEO of Prime Alliance Bank, has been selected to serve as President and CEO of Klarna Bank USA. This application comes as Klarna's US market is growing rapidly, with its Klarna Card surpassing 5 million users in the first quarter of the year. The company sees the US as its largest market by revenue, with most of its investors also based in the US.
Klarna's application follows a trend of fintechs, including Affirm, PayPal, and Payoneer, seeking banking charters in Utah, a state known for being favorable to financial services companies. Analysts like Ben Danner from Javelin Strategy & Research view this as a significant development, noting that building a deposit customer base makes customers more loyal and reduces churn. This means Klarna will transition from operating "like" a bank to being a direct competitor in the US market.
