Here are four key takeaways from the article:
- Klarna’s AI customer service failed, prompting CEO Sebastian Siemiatkowski to admit quality had dropped.
- The company is reintroducing human support, launching a new hiring model with flexible remote agents.
- Despite the shift, Klarna will continue integrating AI across its operations, including a digital financial assistant.
- Klarna’s valuation plunged from $45.6B to $6.7B, partly due to over-reliance on automation and market volatility.
Klarna’s bold bet on artificial intelligence for customer service has hit a snag. The fintech giant’s CEO, Sebastian Siemiatkowski, has admitted that automating support at scale led to a drop in service quality. Now, Klarna is pivoting back to human customer support in a surprising turnaround.
“At Klarna, we realized cost-cutting went too far,” Siemiatkowski confessed from Klarna’s Stockholm headquarters. “When cost becomes the main factor, quality suffers. Investing in human support is the future.”
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Human Touch Makes a Comeback
In a dramatic move, Klarna is restarting its hiring for customer service roles a rare reversal for a tech company that once declared AI as the path forward. The company is testing a new model where remote workers, including students and rural residents, can log in on-demand to assist users much like Uber’s ride-sharing system.
“We know many of our customers are passionate about Klarna,” the CEO said. “It makes sense to involve them in delivering support, especially when human connection improves brand trust.”
Klarna Still Backs AI Just Not for Everything
Despite the retreat from fully automated customer support, Klarna isn’t abandoning AI. The company is rebuilding its tech stack with AI at the core. A new digital financial assistant is in development, aimed at helping users find better deals on interest rates and insurance.
Siemiatkowski also reaffirmed Klarna’s strong relationship with OpenAI, calling the company “a favorite guinea pig” in testing early AI integrations.
In June 2021, Klarna reached a peak valuation of $45.6 billion. However, by July 2022, its valuation had plummeted to $6.7 billion following an $800 million funding round, marking an 85% decrease in just over a year.
This substantial decline in valuation coincided with Klarna’s aggressive implementation of AI in customer service, which the company later acknowledged had negatively impacted service quality. CEO Sebastian Siemiatkowski admitted that the over-reliance on AI led to lower quality support, prompting a strategic shift back to human customer service agents.
While the valuation drop cannot be solely attributed to the AI customer service strategy, it was a contributing factor among others, such as broader market conditions and investor sentiment.
AI Replaces 700 Jobs But It Wasn’t Enough
In 2024, Klarna stunned the industry by revealing that its AI system had replaced the workload of 700 agents. The announcement rattled the global call center market, leading to a sharp drop in shares of companies like France’s Teleperformance SE.
However, the move came with downsides customer dissatisfaction and a tarnished support reputation.
Workforce to Shrink, But Humans Are Back
Although Klarna is rehiring, the total workforce will still decrease down from 3,000 to about 2,500 employees in the next year. Attrition and AI efficiency will continue to streamline operations.
“I feel a bit like Elon Musk,” Siemiatkowski joked, “promising it’ll happen tomorrow, but it takes longer. That’s AI for you.”
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