Klarna applies for U.S. bank charter to expand beyond buy now, pay later

Klarna's Application for Bank Charter

Klarna has applied to federal and state regulators to create a bank subsidiary in the U.S., named Klarna Bank USA. If approved, this bank will be located in Utah and insured by the Federal Deposit Insurance Corporation (FDIC). Gary Harding, a former CEO of Milestone Bank and Prime Alliance Bank, is set to lead this new bank.

Expansion Beyond Buy Now, Pay Later

This application represents Klarna's intention to transition from solely providing buy now, pay later services to a more comprehensive banking model. Recently, Klarna also introduced high-yield savings accounts for U.S. customers, enhancing its service offerings.

Strategic Move for Fintech

The shift to establish a bank is part of a growing trend among fintech firms that are seeking to gain competitive advantages by owning their banking charters. This allows for greater control over services, as well as the potential for improved financial stability through customer deposits.

Market Context and Competition

Klarna's move aligns with similar actions by other fintech companies that also seek to enter the traditional banking space, following companies like Mercury which received conditional approval for its own bank. This trend indicates a significant shift towards fintech firms wanting to operate as independent banks rather than relying on partnerships.