One story has caught our eye. It's Klarna, which has successfully repackaged one of the simplest banking products that underwent a transformation in the 1990s. That product is credit, but as any credit provider knows, you need to diversify your customer base in order to reduce your own risk.
“[Credit is a system whereby] a person who can't pay, gets another person who can't pay, to guarantee that he can pay.”
Klarna is offering German customers a bank account. This is already a reality for Swedish clients, but each market being quite specific, Klarna is now proving the concept in Germany. It will be first offered to their most loyal customers in order to gain feedback, before being rolled out to the wider population.
This is a smart move for the Buy-Now-Pay-Later company which has been accused of inciting dangerous spending habits which push people into unsustainable debt. Being a uni-product company does not give enough exposure to safely ride the ups and downs of economic cycles. Offering new products reduces the business risk, however the question is on what specific product to offer.
In the case of Germany it is clear that it is viewed as a hard nut to crack. As 7 out of 10 German citizens do their banking on the internet, nevertheless digital offers from their bank are viewed with more importance than those from a well-known brand. Perhaps the recent FCA announcement to regulate the Buy-Now-Pay-Later industry is also forcing Klarna to consider complementary revenue streams. And what better way to offer a classic banking product and stay competitive.