In the race to embrace artificial intelligence, few companies have been as bold—or as bruised—as Klarna. The Swedish fintech giant made headlines in 2022 when it laid off approximately 700 customer service employees and began replacing them with OpenAI-powered chatbots.
But just two years later, Klarna is reversing course, quietly rehiring humans and reconsidering its AI-first strategy. What happened in between reveals crucial lessons for any business tempted to cut costs by automating too fast.
The AI Shift: Promises and Pitfalls
At the height of the tech downturn in 2022, Klarna made sweeping changes to its workforce. The company’s headcount dropped from over 5,500 to around 3,000 as it pushed automation to the forefront of its operations.
CEO Sebastian Siemiatkowski was vocal about AI’s potential to revolutionise work, famously ( and boldly) declaring:
“All jobs can be done by AI. We’re not hiring humans anymore.”
The goal was efficiency—and initially, the numbers looked promising. Klarna claimed that its OpenAI-powered chatbot handled two-thirds of customer service interactions within its first month and was equivalent to the work of 700 full-time agents.
The real Costs of Automation
However, behind the scenes, cracks began to show.
While the AI bots excelled at handling basic queries, they stumbled over nuance. Complex issues were mishandled, wait times increased, and customer satisfaction scores plummeted. The cost-saving move came with a different kind of price: Klarna’s customer trust.
By mid-2024, Klarna’s valuation had dropped from a high of $46 billion in 2021 to around $6.7 billion, according to internal company estimates. Though not solely attributed to the AI shift, the collapse in customer satisfaction and service quality played a significant role in undermining investor confidence.
Notably, Klarna also reported a surge in missed or late repayments from customers during this period, resulting in eye-watering losses. Although not documented, we can perhaps suggested a potential link: the inadequacies of AI-powered support may have left many users confused about payment terms, dispute resolutions, or repayment schedules—contributing to growing defaults. The financial strain from these unresolved issues, combined with reputational damage, amplified Klarna’s downturn.
In a stark change of tone, Siemiatkowski admitted:
“When you optimise for cost over quality, what you end up having is lower quality.”
Pivoting Back: Humans Return
By 2025, Klarna began quietly rehiring customer service agents—but this time with a twist. Rather than return to the traditional 9-to-5 model, Klarna is experimenting with a gig-style workforce: part-time agents working remotely and flexibly, only when needed.
This new hybrid model aims to retain the efficiency of AI while reintroducing the human touch that customers clearly missed.
“It’s not about man versus machine—it’s about using both in the right place. And AI just couldn’t replace empathy.”
Lessons for the Industry
Klarna’s misstep has become a cautionary tale across the fintech and tech sectors. The company still touts the benefits of AI—reporting a 152% increase in revenue per employee since Q1 2023 and claiming that 96% of its workforce now uses AI tools daily—but it now does so with a more measured tone.
“We’re not anti-AI,” clarified Siemiatkowski. “We’re pro-customer. And that means knowing where humans still matter.”
Key Takeaways
- Automation is not a cure-all: Replacing humans with AI can damage brand trust if done without safeguards.
- Quality should not be sacrificed for cost: Short-term savings may result in long-term losses—both financially and reputationally.
- Hybrid models are the future: Combining AI’s speed with human empathy might offer the best of both worlds.
- Leadership humility matters: Klarna’s willingness to reverse course, admit mistakes, and iterate may ultimately save the brand.
As the business world watches Klarna’s evolution, one thing is clear: the road to AI-powered efficiency must be paved with customer experience, not just algorithms.
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