Swedish fintech giant Klarna is in the news once again. Here, we attempt to unravel the controversial ‘Rehiring Humans’ headlines.
Earlier news reports claimed the company initially embraced artificial intelligence to streamline operations and cut costs, a move that led to the layoff of 700 employees. Just a year later, it was reported that Klarna was walking back from its full AI integration strategy, reigniting its commitment to hiring human workers.
Why Klarna Began Its AI Journey
When Klarna partnered with OpenAI in 2022, its goals were clear-cut—to boost efficiency and reduce costs. Generative AI was deployed across various functions, including data analysis, customer support, translations, and even creative work like art generation. By 2023, Klarna had completely halted new human hires, with its CEO Sebastian Siemiatkowski confidently declaring, “AI can already do all of the jobs that we, as humans, do.”
The Pitfalls of Too Much AI
Klarna’s shift to AI wasn’t without its flaws. Customer complaints began to rise, with some criticizing the decline in service quality since the introduction of AI. CEO Siemiatkowski recently admitted that the company’s intense focus on cost-cutting led to an unintended sacrifice of customer experience.
“Cost unfortunately seems to have been a too predominant evaluation factor. What you end up having is lower quality,” Siemiatkowski said in an interview.
Klarna’s Course Correction
Recognizing the need to reintroduce a human touch to its operations, Klarna announced plans to rehire employees, with a strong emphasis on customer service roles. This included launching a new recruitment drive for flexible, remote gigs aimed at students and rural workers.
However, Klarna’s CEO now refutes reports of AI pullback, stating that the AI initiative is actually scaling up. He says that AI agents at Klarna outperform humans, handling two-thirds of customer service chats and resolving issues faster.
The Bigger Picture
Klarna isn’t the only company grappling with the complexities of AI integration. Industry peers like Duolingo and CrowdStrike have faced similar challenges, while a global 2024 survey of business leaders highlighted widespread dissatisfaction with AI-only strategies. Specifically, 55% of UK executives who replaced human workers with AI later expressed regret.
The reasons are multifaceted—from ethical concerns around AI implementation to the backlash employees face during layoffs. Klarna itself was criticized for how it handled layoffs, using pre-recorded videos to deliver the news and inadvertently exposing some employees’ personal information.
Key Takeaways for Businesses
- Don’t undervalue the human element: Customer-facing roles require empathy and adaptability, attributes that AI has yet to truly master.
- Evaluate AI’s impact beyond cost-cutting: While efficiency and savings are essential, they should never come at the expense of quality and customer satisfaction.
- Strive for balance: AI can complement human workers, not completely replace them. Successful businesses integrate AI thoughtfully, enabling humans to focus on roles that truly need them.
Klarna’s story serves as a lesson in the importance of strategic adaptability. Whether you’re a startup or a global enterprise, the path to innovation involves constant learning and recalibration. For business leaders, the question is not if AI should be integrated, but how.
