What They Did
Klarna, the Swedish fintech company, automated large portions of its customer service function using generative AI. In doing so, it claimed to replace the work of approximately 700 employees with AI-powered assistants developed in collaboration with OpenAI. This shift enabled faster response times and lower operational costs, but also raised serious questions about quality, empathy, and customer trust. (Business Insider, 13 May 2025)
How They Did It
- Klarna integrated generative AI into its customer service stack, including AI chatbots and virtual assistants trained to handle common queries. (Business Insider, 13 May 2025)
- The company halted new hiring for customer service roles and allowed natural attrition to reduce headcount. (FT, May 2025)
- CEO Sebastian Siemiatkowski embraced the AI-led strategy publicly, going so far as to use an AI-generated avatar of himself to deliver financial earnings presentations. (Business Insider, 13 May 2025)
Why It Matters
Klarna’s approach illustrates both the potential and the pitfalls of large-scale AI implementation. Initially seen as a model for AI-enabled efficiency, the decision to replace hundreds of human roles revealed the limitations of automated support. Customers reported dissatisfaction with robotic responses and limited problem resolution, especially for complex or emotionally sensitive issues. By foregrounding cost-savings over experience, Klarna inadvertently weakened its customer relationships. (Business Insider, 13 May 2025)
Public Response
- Customers and commentators criticised Klarna’s overreliance on automation, citing declines in service quality and emotional tone.
- Negative feedback led to Klarna initiating a pilot program in 2025 to reintroduce human customer service agents.
- CEO Siemiatkowski later acknowledged that cost had been prioritised too heavily in the restructure, at the expense of service quality. (Business Insider, 13 May 2025)
Adoption Type(s)
Transformative AI
Klarna’s shift to an AI-first model redefined its cost structure and staffing model. The AI deployment wasn’t layered on top of existing systems — it became the new default. Klarna’s later move to reintroduce human agents reflected the limits of this approach and the challenges of balancing automation with service quality. (Business Insider, 13 May 2025)
Departmental Use
Klarna’s customer support function was heavily automated using generative AI, replacing hundreds of roles and changing how service was delivered. The AI did not extend to other business functions, so the adoption remains scoped to a single department. (Business Insider, 13 May 2025)
Sources
- Business Insider – Klarna’s AI support replaces 700 workers, now facing backlash (13 May 2025): https://www.businessinsider.com/klarna-buy-now-pay-later-ai-ceo-sebastian-siemiatkowski-earnings-2025-5
- Financial Times – Klarna halts hiring and leans into automation (May 2025): https://www.ft.com/content/bfd9af3d-d607-4877-9571-078ab82a837e
