WEBVTT - Klarna CEO and Co-founder Talks Retail Banking, Upcoming IPO

0:00:00.120 --> 0:00:03.040
<v Speaker 1>Let's get to the corporate story around the fintech space

0:00:03.520 --> 0:00:06.880
<v Speaker 1>and the Swedish buy now, pay later firm Clan are

0:00:06.880 --> 0:00:10.879
<v Speaker 1>pushing really interestingly into retail banking by rolling out digital

0:00:10.920 --> 0:00:14.640
<v Speaker 1>accounts in the US and much of Europe. It's happening,

0:00:14.640 --> 0:00:17.320
<v Speaker 1>of course, as the firm prepares for an IPO potentially

0:00:17.360 --> 0:00:20.200
<v Speaker 1>in the US. Plan A CEO and co founder, Sebastian

0:00:20.239 --> 0:00:24.959
<v Speaker 1>Cimatkowski joins me now from Stockholm for the latest Sebastian,

0:00:25.040 --> 0:00:27.360
<v Speaker 1>thank you for taking the time taught us about what

0:00:27.480 --> 0:00:31.720
<v Speaker 1>this push then into retail banking says about your ambitions,

0:00:31.840 --> 0:00:35.839
<v Speaker 1>Klana's ambitions to push further into this space, what it

0:00:35.880 --> 0:00:38.040
<v Speaker 1>could mean as well for the top line in terms

0:00:38.080 --> 0:00:38.680
<v Speaker 1>of revenues.

0:00:39.800 --> 0:00:42.120
<v Speaker 2>I think, you know, backing instry is so interesting because

0:00:42.120 --> 0:00:44.760
<v Speaker 2>it's one of the probably least competitive round the high

0:00:44.840 --> 0:00:47.199
<v Speaker 2>virus of entry law. You know, you have to be

0:00:47.240 --> 0:00:49.800
<v Speaker 2>a big volume cost company to be able to operate

0:00:49.840 --> 0:00:52.320
<v Speaker 2>in just a lot of regulations and stuff. So but

0:00:52.400 --> 0:00:54.800
<v Speaker 2>ever since fifteen we said that the future of financial

0:00:54.880 --> 0:00:57.840
<v Speaker 2>services will be in digital aipower and financial assystem that

0:00:57.920 --> 0:01:00.279
<v Speaker 2>really works on the behalf of the customer as you're

0:01:00.280 --> 0:01:02.400
<v Speaker 2>spending and say Hey, you're overpaying on the mortgage. Let

0:01:02.440 --> 0:01:04.800
<v Speaker 2>me renegotiate that for you. Let me fix you know,

0:01:04.880 --> 0:01:06.720
<v Speaker 2>let me make sure to save your time and money.

0:01:06.959 --> 0:01:09.560
<v Speaker 2>And ever since that has been the direction of the company.

0:01:09.600 --> 0:01:11.920
<v Speaker 2>And I think now this for us is one of

0:01:11.959 --> 0:01:14.120
<v Speaker 2>those huge steps when we're now starting to offer it

0:01:14.160 --> 0:01:17.840
<v Speaker 2>deposits accounts or positive balances accounts across both Europe and

0:01:17.920 --> 0:01:20.160
<v Speaker 2>the US, which is also unheard of, right because banks

0:01:20.200 --> 0:01:21.880
<v Speaker 2>usually would go like one market at a time, and

0:01:21.880 --> 0:01:24.080
<v Speaker 2>we're launching it in over ten markets at the same

0:01:24.080 --> 0:01:25.800
<v Speaker 2>point of time. So it's super exciting for us. And

0:01:25.840 --> 0:01:29.240
<v Speaker 2>it's very important, as Klon is both about credit payments

0:01:29.319 --> 0:01:32.080
<v Speaker 2>and debit payments where you pay the full amount immediately,

0:01:32.240 --> 0:01:34.360
<v Speaker 2>which is already thirty percent of or one hundred billion

0:01:34.360 --> 0:01:35.679
<v Speaker 2>dollars annual volume.

0:01:36.920 --> 0:01:37.160
<v Speaker 3>Yeah.

0:01:37.200 --> 0:01:39.000
<v Speaker 1>So look, it is ambitious, as you say, and you're

0:01:39.000 --> 0:01:41.040
<v Speaker 1>taking on the lights of JP Morgan, you're taking lights

0:01:41.280 --> 0:01:43.880
<v Speaker 1>of city and others. Do you have a sense of

0:01:43.920 --> 0:01:46.959
<v Speaker 1>about how much market share you could carve out?

0:01:48.440 --> 0:01:49.240
<v Speaker 3>Well, I am.

0:01:49.160 --> 0:01:52.200
<v Speaker 2>Only I'm very very convinced that's what's going to happen

0:01:52.240 --> 0:01:55.520
<v Speaker 2>with technology here. We're going to see a disruption in

0:01:55.560 --> 0:01:58.440
<v Speaker 2>the in the retail banking industry, and that out of

0:01:58.440 --> 0:02:01.840
<v Speaker 2>that will emerge probably three for large global retail bank

0:02:01.840 --> 0:02:04.720
<v Speaker 2>players which you know very likely to meet. Could be Klana,

0:02:04.840 --> 0:02:06.720
<v Speaker 2>could be Revolute, could be a new bank, could be

0:02:06.760 --> 0:02:09.560
<v Speaker 2>a few of those who have already proven Now that

0:02:09.680 --> 0:02:12.000
<v Speaker 2>you know, we have eighty million users worldwide, right, Like,

0:02:12.040 --> 0:02:15.000
<v Speaker 2>acquiring eighty million users and then starting offering them more

0:02:15.000 --> 0:02:18.960
<v Speaker 2>and more rich banking services is pretty unheard of. There

0:02:18.960 --> 0:02:20.920
<v Speaker 2>are few banks of that size, but we're obviously not

0:02:21.000 --> 0:02:22.960
<v Speaker 2>yet serving them with a full offering yet.

0:02:23.000 --> 0:02:25.040
<v Speaker 3>But as we do that, we think it's going.

0:02:24.919 --> 0:02:28.359
<v Speaker 2>To outcompete because the incumbents are simply poorer from a

0:02:28.400 --> 0:02:32.240
<v Speaker 2>technology perspective, and also much much more costs, right. I mean,

0:02:32.240 --> 0:02:34.600
<v Speaker 2>if you compare the cost at which we delivered these

0:02:34.600 --> 0:02:36.800
<v Speaker 2>services to the big banks, is a huge difference.

0:02:36.800 --> 0:02:38.880
<v Speaker 3>So I think that this is just the beginning.

0:02:38.880 --> 0:02:40.720
<v Speaker 2>And just like we've been talking about self driving cars

0:02:40.720 --> 0:02:42.200
<v Speaker 2>for many years and now I actually went on a

0:02:42.200 --> 0:02:43.919
<v Speaker 2>way more in San Francisco has actually worked.

0:02:44.160 --> 0:02:46.120
<v Speaker 3>I think this will eventually happen. It's just a matter of.

0:02:46.080 --> 0:02:50.400
<v Speaker 1>Time, Okay. And in terms of projections around top line

0:02:50.480 --> 0:02:52.760
<v Speaker 1>numbers revenue streams, do you have some estimates. Do you

0:02:52.840 --> 0:02:55.040
<v Speaker 1>have some kind of ballpark figures that you're looking at

0:02:55.080 --> 0:02:57.079
<v Speaker 1>as you project out in terms of the potential value

0:02:57.160 --> 0:02:59.639
<v Speaker 1>of this push.

0:02:59.720 --> 0:02:59.919
<v Speaker 3>Yeah.

0:03:00.000 --> 0:03:01.520
<v Speaker 2>I mean for us, one of the biggest things with

0:03:01.560 --> 0:03:04.480
<v Speaker 2>this for us is that our volumes are over one

0:03:04.520 --> 0:03:07.880
<v Speaker 2>hundred billion dollars per year, but so far those money

0:03:07.919 --> 0:03:10.320
<v Speaker 2>has instantly been pushed back to the bank of the

0:03:10.360 --> 0:03:14.239
<v Speaker 2>customers to the other networks like Visa and MasterCard. And

0:03:14.280 --> 0:03:17.120
<v Speaker 2>with us having positive balances, this means that more of

0:03:17.120 --> 0:03:20.280
<v Speaker 2>the money will stay within our network, more of those

0:03:20.280 --> 0:03:22.520
<v Speaker 2>positive balances will build up in our network, and that's

0:03:22.520 --> 0:03:24.800
<v Speaker 2>obviously going to have a dramatic impact on both our

0:03:24.840 --> 0:03:27.360
<v Speaker 2>payments costs as well as our cost of funding. We

0:03:27.560 --> 0:03:31.320
<v Speaker 2>have already offered very attractive deposits historically. But what's really

0:03:31.360 --> 0:03:34.400
<v Speaker 2>cool about this positive balance account in Europe is we're

0:03:34.440 --> 0:03:36.520
<v Speaker 2>going to offer up to three and a half percent

0:03:38.120 --> 0:03:42.080
<v Speaker 2>interest on that balance account, which I think most European

0:03:42.120 --> 0:03:45.080
<v Speaker 2>consumers have not been spoiled with that kind of positive

0:03:45.080 --> 0:03:47.120
<v Speaker 2>interest on their debut accounts.

0:03:48.040 --> 0:03:49.960
<v Speaker 1>Okay, so you got that interest offering in you've got

0:03:49.960 --> 0:03:52.640
<v Speaker 1>the banking license in Europe. Of course, you don't have

0:03:52.680 --> 0:03:55.000
<v Speaker 1>a banking license in the US, yet are you making

0:03:55.040 --> 0:03:57.080
<v Speaker 1>progress on that front? I know this is an ambition

0:03:57.160 --> 0:03:59.080
<v Speaker 1>of yours. What is the time frame? Do you need

0:03:59.120 --> 0:04:00.720
<v Speaker 1>to get that banking license before the IPO?

0:04:02.600 --> 0:04:03.960
<v Speaker 3>No, I don't think that's the prequisite.

0:04:04.360 --> 0:04:06.960
<v Speaker 2>I think I mean to somebody, our US success almost

0:04:07.000 --> 0:04:08.520
<v Speaker 2>took a lit bit by surprise, right, Like I mean,

0:04:09.120 --> 0:04:12.040
<v Speaker 2>in twenty nineteen, our US business was non existent. Today

0:04:12.080 --> 0:04:14.960
<v Speaker 2>it's the largest part of our business, both in revenue

0:04:15.000 --> 0:04:17.280
<v Speaker 2>and number of customers. It's over thirty million. We're probably

0:04:17.279 --> 0:04:18.840
<v Speaker 2>gonna hit over a billion dollars in revenue in the

0:04:18.920 --> 0:04:23.320
<v Speaker 2>US pretty soon. So but that has obviously made sure

0:04:23.320 --> 0:04:26.719
<v Speaker 2>that we are doubling down our efforts to accelerate rolling

0:04:26.720 --> 0:04:29.640
<v Speaker 2>out new services in the US as well. But especially

0:04:29.640 --> 0:04:31.760
<v Speaker 2>when we talk about things like banklizes, it does take

0:04:31.839 --> 0:04:32.200
<v Speaker 2>some time.

0:04:32.279 --> 0:04:32.440
<v Speaker 3>Right.

0:04:33.120 --> 0:04:34.560
<v Speaker 2>It took us a few years to get our europe

0:04:34.640 --> 0:04:36.839
<v Speaker 2>of accay license. So we don't want to make you

0:04:36.880 --> 0:04:38.480
<v Speaker 2>know the dependency on the IPO to that.

0:04:39.960 --> 0:04:42.080
<v Speaker 1>Okay, what are you saying in terms of consumer behavior

0:04:42.240 --> 0:04:44.440
<v Speaker 1>in the US, you see any softness at all, Sebastian,

0:04:44.560 --> 0:04:46.239
<v Speaker 1>or are they holding up in terms of that resilience?

0:04:46.240 --> 0:04:48.479
<v Speaker 1>And you sing a change in consumer habits.

0:04:49.000 --> 0:04:51.119
<v Speaker 4>Yeah, I'm a little bit confused about the reports around

0:04:51.120 --> 0:04:53.640
<v Speaker 4>that because from my perspective, when we analyzed our numbers,

0:04:53.640 --> 0:04:56.039
<v Speaker 4>and you know, again considering that we have over over

0:04:56.120 --> 0:04:58.279
<v Speaker 4>half of the top one hundred US we tell us

0:04:58.720 --> 0:05:01.080
<v Speaker 4>that we work with, we we do have quite attract

0:05:01.120 --> 0:05:02.720
<v Speaker 4>you know, interesting numbers to follow these things.

0:05:02.760 --> 0:05:05.400
<v Speaker 3>But my impression was that that you know.

0:05:05.400 --> 0:05:08.080
<v Speaker 2>Christmas Is actually would have been a little bit softer

0:05:08.120 --> 0:05:10.279
<v Speaker 2>that we saw about nine months ago, but thanks to

0:05:10.320 --> 0:05:13.000
<v Speaker 2>a lot of discounting, the volumes were pushed up and that.

0:05:12.960 --> 0:05:14.039
<v Speaker 3>Didn't really materialize.

0:05:14.080 --> 0:05:16.039
<v Speaker 2>And now as I'm hearing some of these retailers report

0:05:16.080 --> 0:05:18.039
<v Speaker 2>softing numbers, we actually see the opposite.

0:05:18.080 --> 0:05:20.120
<v Speaker 3>Have seen quite a good.

0:05:19.880 --> 0:05:23.440
<v Speaker 2>And strong solid sales in the US, so so not

0:05:23.440 --> 0:05:25.280
<v Speaker 2>not really something we have been able.

0:05:25.480 --> 0:05:30.640
<v Speaker 1>So okay, on the IPO, Sebastian, how much enthusiasm have

0:05:30.760 --> 0:05:32.960
<v Speaker 1>you seen for that IPO so far?

0:05:34.920 --> 0:05:38.440
<v Speaker 2>Well, we're very flattered by media attention to it, at

0:05:38.560 --> 0:05:42.240
<v Speaker 2>least since it seems to be written about quite a lot.

0:05:42.279 --> 0:05:45.840
<v Speaker 1>But I think that's like investors from investors.

0:05:46.360 --> 0:05:49.320
<v Speaker 3>Yeah, I think that, like you know, from investors.

0:05:49.360 --> 0:05:52.160
<v Speaker 2>I mean, obviously we had you know, one or two

0:05:52.200 --> 0:05:54.640
<v Speaker 2>weeks ago a pretty you know, dramatic event in the

0:05:54.640 --> 0:05:56.640
<v Speaker 2>stock market, right so that you know, you can kind

0:05:56.640 --> 0:05:58.320
<v Speaker 2>of see I think before that there was like more

0:05:58.360 --> 0:05:59.880
<v Speaker 2>of an acceptance we're going to go into a peer

0:06:00.120 --> 0:06:02.159
<v Speaker 2>time where you know, IPOs are going to start happening

0:06:02.160 --> 0:06:03.960
<v Speaker 2>in there's going to be more interesting in these But

0:06:04.120 --> 0:06:06.039
<v Speaker 2>I mean, in our opinion, I think that what people

0:06:06.080 --> 0:06:09.240
<v Speaker 2>really appreciate mostly about Klana is that two years ago

0:06:09.600 --> 0:06:13.120
<v Speaker 2>this business was you know, very much attractive, growing fast

0:06:13.160 --> 0:06:15.279
<v Speaker 2>in the US, but also loss making. And in just

0:06:15.360 --> 0:06:18.279
<v Speaker 2>two years we have increased revenue by fifty percent, we

0:06:18.279 --> 0:06:20.800
<v Speaker 2>have increased gross profit by one hundred percent, and we

0:06:20.960 --> 0:06:23.760
<v Speaker 2>reduce costs in thirty percent, which means that now we're

0:06:23.760 --> 0:06:26.400
<v Speaker 2>are you know, profitable, And I think those kind of

0:06:26.400 --> 0:06:29.000
<v Speaker 2>financial performances obviously do raise the eyeboras a little bit

0:06:29.040 --> 0:06:33.560
<v Speaker 2>with investors also, as we have, due to Ai, committed

0:06:33.640 --> 0:06:36.440
<v Speaker 2>to continue shrinking the company. We've already gone from four

0:06:36.440 --> 0:06:38.520
<v Speaker 2>to half thousand to three and a half thousand in

0:06:38.560 --> 0:06:41.200
<v Speaker 2>the last year, and we are committed to continuing on

0:06:41.279 --> 0:06:44.880
<v Speaker 2>that path, not by layoffs but simply by natural attrition.

0:06:45.080 --> 0:06:49.440
<v Speaker 1>Yes, you've been an early mover on Jenai, and you

0:06:49.480 --> 0:06:52.240
<v Speaker 1>reached out to Sam Moultman of Chat to ebt open

0:06:52.279 --> 0:06:54.200
<v Speaker 1>Ai pretty pretty early on in all of this, what's

0:06:54.200 --> 0:06:56.440
<v Speaker 1>been one of the most surprising things that stood out

0:06:56.440 --> 0:06:59.080
<v Speaker 1>to you as you've embedded some of this GENAI across

0:06:59.120 --> 0:06:59.560
<v Speaker 1>the business.

0:07:01.360 --> 0:07:04.080
<v Speaker 2>Yeah, I think that it is to me in a

0:07:04.120 --> 0:07:06.280
<v Speaker 2>way I would actually partially say this like I was

0:07:06.400 --> 0:07:08.960
<v Speaker 2>even you know, kind of pulled into the hype a

0:07:09.040 --> 0:07:10.640
<v Speaker 2>year ago where a little bit like we you know

0:07:10.760 --> 0:07:12.960
<v Speaker 2>again self driving cars. You know, we used to read

0:07:13.000 --> 0:07:14.920
<v Speaker 2>about them in the press every day and then you

0:07:14.960 --> 0:07:15.680
<v Speaker 2>would look out.

0:07:15.520 --> 0:07:17.080
<v Speaker 3>The window and like, where are they? Where are they

0:07:17.240 --> 0:07:19.200
<v Speaker 3>not happening? And now it's actually happening.

0:07:19.440 --> 0:07:21.120
<v Speaker 2>And I think that, like to somebody I was almost

0:07:21.440 --> 0:07:23.240
<v Speaker 2>drawn into the hype a year ago as well, It's like, Okay,

0:07:23.320 --> 0:07:25.720
<v Speaker 2>in the year you know, the whole thing will already

0:07:25.720 --> 0:07:28.640
<v Speaker 2>have like totally dramatically change everything, and now you almost

0:07:28.640 --> 0:07:30.360
<v Speaker 2>have the opposite. You hear people go oh, we tried it,

0:07:30.400 --> 0:07:32.760
<v Speaker 2>and give us the results and so forth. But in tonally,

0:07:32.760 --> 0:07:34.840
<v Speaker 2>what I'm seeing to plan is that it is working.

0:07:35.040 --> 0:07:37.240
<v Speaker 2>It's just it will take a little bit further time

0:07:37.280 --> 0:07:38.760
<v Speaker 2>before it will have the full implications.

0:07:38.800 --> 0:07:39.040
<v Speaker 3>To us.

0:07:39.080 --> 0:07:41.680
<v Speaker 2>We've already had delivered so fantastic results, but we were

0:07:41.720 --> 0:07:42.320
<v Speaker 2>super excited.

0:07:42.360 --> 0:07:43.200
<v Speaker 3>What's coming in the next.

0:07:43.120 --> 0:07:45.960
<v Speaker 1>Four months before we let you go? It's about you, look,

0:07:46.000 --> 0:07:47.240
<v Speaker 1>what do we win you back? You're going to list

0:07:47.280 --> 0:07:50.240
<v Speaker 1>in the US. That's a suggestion, that's the expectation. What

0:07:50.360 --> 0:07:52.640
<v Speaker 1>does Europe and the UK need to do? Is there

0:07:52.680 --> 0:07:54.840
<v Speaker 1>anything they could do to win this listing?

0:07:56.560 --> 0:07:59.000
<v Speaker 2>Well, one thing that I have said to regulators in

0:07:59.000 --> 0:08:00.800
<v Speaker 2>the year, because there's been so much discussion in Brussels

0:08:00.840 --> 0:08:03.480
<v Speaker 2>as well, how do we create a competitive market? And

0:08:03.560 --> 0:08:06.640
<v Speaker 2>I have suggested actually get some positive from some of

0:08:06.640 --> 0:08:09.080
<v Speaker 2>the foreign ministers. I was invited with all the finance

0:08:09.080 --> 0:08:12.320
<v Speaker 2>finasters of you. Is that I think that if if

0:08:12.360 --> 0:08:16.440
<v Speaker 2>Europe will never you know, will never agree on like where.

0:08:16.280 --> 0:08:18.960
<v Speaker 3>Should listing should the big stock market be? Is it Prairi,

0:08:19.080 --> 0:08:22.239
<v Speaker 3>is is it Frankfurt? Is it you know whatever, European country?

0:08:22.320 --> 0:08:23.920
<v Speaker 2>So the only way to actually get this to work

0:08:24.000 --> 0:08:26.720
<v Speaker 2>is if if you would mandate all the stockingcases in

0:08:26.760 --> 0:08:29.200
<v Speaker 2>Europe so that any stock that is listed in one

0:08:29.280 --> 0:08:32.000
<v Speaker 2>is automatically trading in another. I think that could reach

0:08:32.000 --> 0:08:34.800
<v Speaker 2>the critical mass to create an investor base that is,

0:08:34.880 --> 0:08:36.560
<v Speaker 2>you know, similar size the one we see in the US,

0:08:36.600 --> 0:08:38.439
<v Speaker 2>because that's really one of the biggest challenges when you

0:08:38.480 --> 0:08:41.280
<v Speaker 2>make US comparisons. If a company like ours is already

0:08:41.480 --> 0:08:45.200
<v Speaker 2>mostly US business from revenue size, it will have to

0:08:45.240 --> 0:08:47.800
<v Speaker 2>be a you know, a similar size and investment base

0:08:47.840 --> 0:08:51.440
<v Speaker 2>and stock market size to make it a relevant listing point.

0:08:52.760 --> 0:08:55.720
<v Speaker 1>Okay, look, Sebastian really appreciated time as ever really important

0:08:55.760 --> 0:08:57.640
<v Speaker 1>updates coming through from the business clan a CEO and

0:08:57.720 --> 0:09:02.160
<v Speaker 1>co founder Sebastian Cimatkowski on the latest Thank you, Sebastian.

0:09:02.200 --> 0:09:04.520
<v Speaker 1>As that company of course prepares for that IPO likely

0:09:04.600 --> 0:09:06.560
<v Speaker 1>the summer of next year, is what we understand