Klarna submits an application for a US banking license.
Klarna aspires to become a genuine American bank. The Swedish BNPL leader has sought a banking license in the US, hoping that a more accommodating Washington will enable it to penetrate a market that has been tough for its European competitors.
According to tech.eu, Klarna has submitted an application to US regulatory bodies to establish its own bank. The Swedish fintech has filed with the Utah Department of Financial Institutions and the Federal Deposit Insurance Corporation to create Klarna Bank USA, which would be an FDIC-insured entity. If the application is successful, Gary Harding, a former chief of Milestone Bank, would be in charge, as reported by CNBC.
Transitioning from BNPL to a full-fledged bank
Klarna already possesses a banking license in Europe, which its CFO has previously described as a significant advantage. In the United States, however, it has relied on partner banks. The company recently introduced high-yield savings accounts, but the deposits are held by WebBank rather than Klarna. Securing a US charter would change this arrangement.
Owning a bank would allow Klarna to finance loans using customer deposits instead of relying on more expensive wholesale funds. It could also directly offer checking accounts and credit cards, along with consolidating payments, lending, and merchant services internally. The objective is to establish a more cost-effective and self-sufficient operation in the American market.
A competitive race for charters
Klarna is part of a broader trend. Revolut applied for a US charter in March, while Dutch competitor Bunq refiled its application this year. The fintech Mercury received conditional approval in April. What was once seen as a burdensome task for fintechs—obtaining a charter—now appears to be viewed as a competitive advantage.
Timing is crucial. The US banking sector has historically been resistant to European newcomers, and Klarna perceives the Trump administration as more receptive to new entrants. “Banking is built on trust,” co-founder and CEO Sebastian Siemiatkowski remarked, considering a dedicated license as “the natural next step.”
Significance of the move
Klarna has made significant strides in the American market, claiming over 30 million US customers, a US debit card, and more than $93 billion in extended credit. However, the market environment is not entirely welcoming; Monzo has withdrawn from the US to concentrate on Europe, and Klarna’s shares are currently trading at about half their value from the September IPO.
Acquiring a banking license would solidify its commitment to the US market at a time when investors are seeking more fiscal discipline. For now, Klarna has submitted the necessary documentation, and the outcome will hinge on regulators and the trust they establish.
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