Many people associate Klarna with deferred payments and paying in instalments, but the company describes itself as an everyday finance network. Its app guides users from discovering shops and products through to payment, with loyalty cards and features that encourage visits to physical shops along the way. It also offers immediate payment options, and its services can be used without browsing the app. The company is still finding its feet in the Hungarian market—a topic we discussed with Dan Wozniak, Klarna’s country manager for Hungary.
What sets you apart from the new wave of financial services providers? Everyone mentions Revolut, but there’s also Wise. If I’m already a Revolut Metal customer, for example, why would I need Klarna?
For a start, we’re a licensed bank, and our aim is to cover the full range of people’s money management needs. Revolut’s starting point was frictionless trading, including crypto. Ours was a straightforward payment experience. Other services then build on that: an account, a card and so on. We now have almost six million card users worldwide.
Opening an account is a simple digital process; there’s no need to go anywhere in person. The app shows customers relevant shops and lets them manage their orders and payments in one place.
Some people like being able to see at a glance when and where they’ve shopped, and when their payments are due. Or they might want to order the same basket again, for instance when doing their regular shopping.
Essentially, you’re aiming for an integrated user experience.
Exactly.
If I walk into the Spar on Móricz Zsigmond körtér, can I pay with Klarna?
Not in Hungary at the moment, because our card isn’t available in the Hungarian market yet. In Poland, for example, the Klarna card is already available.
You mentioned “buy now, pay later”. Does that help people manage their money more responsibly, or does it simply put off the moment when they have to pay? There’s a credit risk involved, after all.
As a regulated financial institution, our aim is to make sure customers understand what they’re buying, how much it costs and whether they’ll have to pay any interest—all before they make the purchase.
Most of our products are interest-free. We operate primarily on fees paid by retailers; with those products, we don’t charge the customer a fee. If you compare that with traditional retail finance, the interest rates can be high, potentially leaving people trapped in debt.
Our approach is to help customers avoid that situation. They should be able to see the terms clearly, upfront, without having to pick through the small print. Then they can make an informed decision.
When does a typical Klarna customer use this? My first thought is that people turn to it when they’ve run out of money—which might be precisely when they shouldn’t. What’s the picture beyond that?
A lot of people think that. But our data shows that a large proportion of our users are highly educated, are studying or have studied at university, and live in or around cities. I’m not making a judgement about how clever anyone is. The point is that they tend to have a steady, good income, and many have families.
They could afford to buy a pair of AirPods for 60,000 forints, for example, but from a household cash flow perspective, it’s easier to split that into three interest-free payments of 20,000 forints. Someone who manages their money carefully could even invest the remaining two-thirds in the meantime.
Credit cards are very common in the United States, much less so here. Aren’t you trying to become a European version of the American credit card model?
I’d look at it from a different angle. Outstanding credit card balances in the US run into thousands of dollars. For a Klarna user, the figure is less than a hundred dollars. Our aim is to help people avoid getting into debt.
So you see the service as a way to help people plan their finances.
Yes. It’s worth adding that we bear the risk if someone doesn’t pay us back. We’ve developed systems to minimise that risk: identifying misuse and cases where someone is unlikely to be able to repay the amount. We want people to use this payment method responsibly.
Let’s talk about the brand. I’m going to use Revolut as an example again because it’s the first that comes to mind: it has a modern style and a design that also helps build a sense of community. What are you aiming for? I also read in your investor materials that you’d rather be a lifestyle brand than a typical bank. What does that mean in practice?
Let’s start with our colour. Blue is considered the colour of trust, which is why so many banks use it. We deliberately wanted to do something different.
Then there’s how we communicate with customers: we explain things clearly and directly, in as few words as possible, rather than burying them in the small print.
We don’t want using the app or making a purchase to feel like dealing with a bank in the old-fashioned way. Part of our brand is the ambition to set a new standard for how people pay, shop and manage their money.
I understand, but I’d like a concrete example. What would make me think of K&H as a bank and see you differently? OTP, for instance, can be rather stuck in its ways, but in some places it’s still part of the community: there’s a branch, and people know their banker personally. How do you replace that personal relationship in a digital world?
First of all, we’re available at the checkout of major retailers. We believe that, in the digital world, our battle is largely won or lost among the payment buttons. That’s why we don’t necessarily compare ourselves with OTP or K&H, but with other payment platforms, or with brands such as Mastercard and Visa.
Every payment brand is trying to make itself as recognisable as possible. The more readily a user associates a particular experience with it, the more likely they are to click.
I know that only partly answers your question, because I’m talking specifically about the online space. That’s our main area, but in-store use is growing too. The people who want to use Klarna in physical shops are primarily those who already use it online. We want to offer them the same straightforward payment experience in a shop—perhaps one day even in a Spar in Hungary.
Traditional banks were established before the digital age and moved from the offline world into the online one. We’re coming at it from the other direction.
How can brands build lasting relationships with people, and how are communities, creators and artificial intelligence shaping those connections? These questions were at the heart of Community Culture, an event hosted by The Good Persona at Budapest’s Toldi Cinema on 24 September. In this interview series, we continue the conversation with the event’s speakers about the changing rules of brand building.