What you need to know
- Klarna, a Swedish fintech company, is integrating AI into its workflow, allowing it to get things done faster and easier with fewer employees.
- The company suffered immense losses while expanding its operations to the US, but it has since become profitable with attribution to its AI strategy.
- Its custom chatbot can handle the workload assigned to 700 customer service employees, scaling the average resolution time for customer service inquiries from 11 minutes to 2 minutes.
In an odd but not entirely surprising turn of events, AI has begun the hostile takeover of jobs from professions. Despite Microsoft's updated Services Agreement, some companies are substituting professionals with AI, not treating it as a mere guide.
Klarna, a Swedish financial services firm, plans to integrate AI into its workflow, allowing it to do more with fewer employees. Over the past year, the financial institution's workforce has shrunk from 5,000 employees to 3,800.
According to Klarna, approximately 20% of its employees leave the company every year for new roles in new companies. However, the tech company doesn't hire new employees to replace those who leave. This has allowed it to effectively reduce the size of its workforce by 20% annually.
Klarna's interim financial report attributed the drastic changes in its workforce to a reliance on artificial intelligence. "AI is allowing us to do more with fewer employees, which allows us to reduce the number of employees at the company," Klarna told Windows Central.
"Not only can we do more with less, but we can do much more with less. Internally, we speak directionally about 2,000 [employees]. We don't want to put a specific deadline on that," added Klarna CEO Sebastian Siemiatkowski.
The company further explains that its custom AI-powered chatbot can handle the workload assigned to 700 customer service employees. In addition, the new approach has scaled down the average resolution time for customer service inquiries from 11 minutes to 2 minutes. The financial institution says the new approach boasts better customer ratings and reviews.
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Klarna's custom AI chatbot is also leveraged to facilitate the company's marketing efforts. While the massive layoffs at the company are concerning, Klarna CEO Sebastian Siemiatkowski told BBC that it would present the opportunity to offer the remaining workers generous pay packages.
AI is generating revenue for Klarna
Per the interim financial report, the company reported a 27% increase in revenue, translating to 13.3 billion Swedish krona (£990 million). Before integrating AI into its workflow, the institution was in a financial crisis, with a loss of 456 million krona. The company's new AI strategy and mass job cuts helped it recover the losses, turning it into a profitable venture.
According to the report:
"Our proven scale efficiencies have been enhanced by our investment in AI, which has driven down operating expenses and improved gross profits."
The company previously enjoyed making profits until 2019, when it started experiencing losses as it expanded its operations in the United States. This significantly impacted its market valuation, pushing it from $46 billion to $6.7 billion between 2021 and 2022.
Siemiatkowski says the company could consider an initial public offering (IPO). "We have not yet taken any decisions. It will happen in due course," the CEO concluded.
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