Jan 10, 20229 min read

Klarna 2021: a year like no other.

by Alex Marsh

2021 – what a rollercoaster of a year…! As we welcome in the new year, I wanted to take the chance to look back and remember the highs and lows and everything in between from the past year – and importantly thank all the incredible Klarnauts (colleagues) and partners who have helped us navigate through another unprecedented 12 months – and set us for 2022.

Our “2021 Wrapped” report.

Any thoughts on 2021 would feel wrong if we didn’t start with Covid-19 and the pandemic. 

Rewind to January 2021 and the UK was in its third national lockdown – one which went on much longer than we could have ever expected. And 12 months on, remarkably over 50m people in the UK have been vaccinated as we tackle the spread of the omicron variant. 

The lasting impact of the past 2 years on all aspects of our life – and also what lies ahead over the next 3-5 years – remains uncertain – but amongst this uncertainty its worth calling out a couple of pre-pandemic trends which have continued and in fact accelerated over the past year and have been front of mind at Klarna in the UK:

  • Shift to e-commerce:  with many working remotely or hybrid at various times over the past year and the UK highstreets closed for the first quarter of the 2021, the huge shift to e-commerce seen in 2020 (leaping from 20% to +30% of overall retail sales) went from being an aberration to a new normal as consumer shopping habits permanently changed across all demographics. 
  • New ways to bank and pay: Consumer confidence has been on a similar rollercoaster, tied to lockdowns, vaccinations and variants. The impact was in parts mitigated by the extension of government rescue measures, with many taking the opportunity to save and clear down debt as was seen in 2020. We saw similar trends as those last seen during the financial crisis of 2008, with a drop in credit card utilisation and trust in the old banks remaining low (many ‘poor’ one-star Trustpilot scores still knocking around).The good news for consumers this time round is the growing range of viable digital alternatives and 2021 saw acceleration in the rise of challenger banks and also Buy Now Pay Later (BNPL).

             

These trends have undoubtedly had an impact on our own business over the past 12 months, with our customer base growing by 40% to over 16 million UK consumers and we’ve just tipped over 18,000 retail partners. But none of this could have been possible without our fantastic team, and to keep up with such incredible growth and expansion in our product offering, we almost doubled our workforce in the UK to almost 400 Klarnauts. 

So as promised here are a few of the stand-out moments from 2021:

January – February 2021: The big topic in 2021 for our sector has been the future of regulation of BNPL in the UK, and it all started with the publication of the FCA’s Woolard Review in early February. This came after many months of diligent research, interviews and virtual round tables bringing together a wide range of stakeholders. Late 2020 and January 2021 had been intense – but February 2021 was next level… With working from home firmly in place, our home became an impromptu broadcasting studio – including a first foray into nerve-wracking live TV on BBC Breakfast explaining why at Klarna we wholeheartedly welcome regulation.

March 2021: After a break-neck February, March was the complete opposite – much more stationary – with major surgery to rebuild my right ankle (the ligaments, tendons and cartilage) following a running accident in October 2020 when I fell during a marathon.  March was mainly spent non-weight-bearing in bed (I did buy a bed desk  as work didn’t stop!). As someone who is normally very active, the combination of being in bed and on crutches plus lockdown / homeschooling our kids Isabelle & Henry was tough but I’m incredibly grateful to my family and our dog Mabel for keeping me smiling!

April – May 2021: Back on my feet, during spring we increased our efforts to dispel some of the most widespread myths about Klarna and took our fight to the broken banking sector to drive better consumer outcomes. This included the launch of our award winning Discover the Truth campaign to finally set the record straight and speak the truth about Klarna and the BNPL sector that is saving consumers millions of pounds in interest charges every year (over £100m in past year alone – according to Bain). This campaign saw us take over 7 murals across the UK with beautiful pieces of artwork by artist Ignasi Monreal – each based upon a common misconception seen online or in the media.

This was followed up by our WhyPayInterest campaign where we turned the UK pink to shed light on how the banking system rips off consumers, charging them billions in interest every year. As part of this initiative, we launched a light projection campaign – the largest ever in the UK! – over London’s County Hall and 75 other iconic sites across the country, check out the video below!

 

June 2021: To make space for all our teams and with working from home ending in June, we moved our HQ in London to a fantastic WeWork in Holborn. Ensuring our teams felt confident and safe in the office was a top priority plus plenty of different spaces to enable creative and collaborative working has been a huge benefit. We’ve also been able to host some great events over the past 6 months ranging from Government Ministers to a delegation of innovative Swedish fintechs visiting the UK for inspiration. 

July 2021: With summer in full swing it was time for Covid safe socialising and sport – with the return of Wimbledon, the Euros and of course not forgetting Fintech Week London (in person!). It felt quite surreal after a spring in lockdown, and was a great reminder of the energy that comes from being around other people – seeing existing friends and making new ones. An absolute highlight was the invitation to see Italy defeat Spain in the semi finals of the Euros at Wembley.

And not forgetting Fintech Week London, our first in person conference of 2021, which came with a focus on Open Banking, something we’re very passionate about at Klarna. Right now we are trialling it to improve eligibility & affordability assessments to help improve access to low cost credit for those who haven’t built up a ‘traditional’ credit score, and longer term, it will improve mobility and choice for consumers and truly disrupt the old banks.

August 2021: In August we launched our UK Small Business Support Package,  investing £3 million into 100 small UK businesses across four categories, helping small businesses recover from the pandemic and bolster their growth. The response over the past 6 months has been overwhelming and there are lots of exciting plans for 2022 to build on this momentum. A big thank you to all the partners involved including: Shopify, WeWork, Global-e, dotdigital and Enterprise Nation.

September 2021: In September we had the pleasure of hosting both our Klarna CEO Sebastian Siemiatkowski and Chairman Sir Michael Moritz in London after nearly 18 months of travel restrictions. This included a hugely inspiring evening where Sir Michael kindly answered questions from Lionel Barber and a hand-picked audience – plus Sebastian gave a fireside chat at London Tech Week passionately covering everything from the growth in BNPL and the dirty tricks of the Old Banks, to Open Banking, Crypto and IPO plans.

We also rolled-out our final campaign of 2021 – ‘Old credit is history’ – where we explored the history of money through the ages. We kicked off with a once in a lifetime dinner at the Natural History Museum and brought it to life for consumers in London with a pop-up money museum on the streets of Soho (see below for some amazing pictures). We loved to see how Klarna advocating for more sustainable credit – and our very own products – influenced the wider industry, with PayPal announcing no fees on their BNPL service! 

October 2021: This was a particularly exciting month as after many months of superhuman efforts from Klarnauts across many teams (and countries) we announced a number of changes to our UK product offering, including introducing ‘Pay Now’ which gives UK consumers even greater control over the way they pay and most importantly allows them to pay with the money they have. 

As recommended in the Woolard review at the start of the year, we further strengthened the language at checkout to make it absolutely clear that BNPL options are credit products. We also removed the last late fees on our regulated Financing product and rolled out Open Banking powered tools to improve real-time lending decisions and make our credit and affordability checks even more robust. 

On top of all of this, later in October HM Treasury published the much anticipated consultation paper on the future regulation of BNPL as a follow up to the Woolard Review. This was a very positive step forward for both consumers and the BNPL sector – acknowledging the benefits of these interest free BNPL products versus high cost options such as credit cards and overdrafts – while recognising there are still bad products and providers out there which need to be addressed. For more on this you can read our dedicated blog post

November 2021: A personal one for November – When I’m not doing all things Klarna my other big passion is education – and the huge potential for education to open up doors and opportunity for young people. In November it was publicly announced that I had joined the inaugural Industry Advisory Board for The 93% Foundation – a leading social mobility charity, tackling the state-private education divide and levelling the playing field for students from disadvantaged backgrounds. Their work is very close to my heart coming from a state school background myself and for many years being a governor for the wonderful Varndean School in my hometown of Brighton. I’m very much looking forward to 2022 and getting more involved in the 93% foundation.

December 2021: And before you know it, it was December – catching breath from another record breaking Black Friday and Cyber Monday and supporting UK retailers and shoppers in the run up to Christmas (including a very Klarna-esque tree at Paddington Station). Sadly the emergence of Omicron brought a return to Plan B measures in the second week of the month whilst vaccine boosters across all ages were accelerated – albeit no return to lockdown as we had in the previous year. 

We were fortunate at the start of December to enjoy one of very few team ‘social’ events of the year – with an invitation to the wonderful Annual Christmas Luncheon of the Swedish Chamber of Commerce for the UK (which has been running for over a century!). A chance to see old and new friends and best of all thank the team for a super busy year and more to come in 2022.

In short, 2021 has been very busy. We aimed to always go above and beyond to provide our best services to both retailers and consumers and also to improve our products and set standards that can bring change to an out-dated industry that for too long didn’t listen to consumers’ needs. And for the record, we’re just getting started.

This coming year we’ll continue our fight for more sustainable and fairer shopping, payments and banking. We started 2021 on the topic of regulation and this first week of 2022 we submitted our response to the HM Treasury consultation on BNPL regulation which closed last Thursday (also why this blog is out a little bit later than planned!). This is such an important step forward in regulating the industry – something we have long called for, so high standards and protections for consumers are consistently in place across all providers. 

Looking ahead, it’s important the regulation protects consumers, not banks, and enables continued innovation, competition and alternatives to high-cost credit, within the appropriate guardrails.

In the spirit of transparency you can see our response to the consultation here: https://lnkd.in/gtrNShUj.

So one last thank you to all the team at Klarna for 2021 and I wish you all the very best for 2022. 

Alex