Klarna seeks US banking authorization beyond buy now, pay later

KlarnaThe Swedish fintech company best known for its buy now, pay later service announced Monday that it has filed with federal and state regulators to form a U.S. banking subsidiary.

If approved, Klarna Bank USA will become a Federal Deposit Insurance Corporation-backed financial institution chartered in Utah, the company said. Klarna said the proposed bank would be led by Gary Harding, former CEO of Milestone Bank and Prime Alliance Bank.

“We’re seeing a trend in the U.S. for a fairer and more transparent approach, and obtaining our own banking license is a natural next step,” said Klarna co-founder and CEO Sebastian Siemiatkowski.

The move “will provide customers with the tools to borrow responsibly and build financial confidence, while bringing more competition, innovation and choice to the market,” he said.

Klarna’s filing is the latest sign that fintech companies, which primarily partner with U.S. banks to provide services, see having their own charter as a key advantage. In April, fintech provider Mercury announced it had received conditional approval to form its own bank, joining a wave of fintech and crypto companies seeking entry into the traditional banking system.

Klarna said its charter, if approved, would allow it to bring banking operations in-house and strengthen trust across payments, credit and merchant services.

The application marks Klarna’s latest step towards becoming a broader consumer bank, rather than a buy-now-pay-later provider. Last month, Klarna introduced a high-yield savings account to its US customers, whose partner accounts are held by WebBank.

Owning a bank allows fintech companies to fund loans with their own customer deposits instead of more expensive wholesale financing, offer checking accounts and credit cards directly, and reduce dependence on third-party banking partners.

Klarna, which went public last September, is trading at about half its IPO price of $40.