Klarna has confirmed plans to replace huge numbers of its human workers with AI as it looks to get into better financial shape ahead of its planned IPO.
The buy-now-pay-later giant was profitable until 2019, but its value dropped significantly in 2021 and 2022, from US$46 billion to $6.7 billion. The decline in value followed a rapid expansion across the US, but at present that financial performance is bad news for the firm’s plans to list on the stock market.
As part of its turnaround efforts Klarna said in its financial results, published August 26, that it has reduced headcount by more than 1,000 workers in the last year by implementing a hiring freeze and replacing workers who resign with AI.
As of August 2024, Klarna’s global workforce stands at 3,800, down from around 5,000 one year ago. There are plans to reduce headcount by a further 1,800 in the “coming years”.
AI in financial services
The approach appears to be working. Klarna says its average revenue per employee has increased 73 percent when compared with 2023 figures. Furthermore, across its customer service suite, Klarna says its AI chatbot performs the work of 700 human employees.
In service, Klarna says it has cut average resolution time for customer service issues from 11 minutes to two, while “maintaining the same customer satisfaction scores as human agents”. AI is also being used in marketing.
Klarna said: “Our AI assistant now also serves as a powerful shopping assistant that helps consumers discover and choose products tailored to them, further transforming the shopping experience and helping them save time and money.”
The firm also said the use of AI has allowed it to pay its remaining human workers more.
However, during All Access: CX in Financial Services 2024, Michael Nevski, director of global insights for Visa said that while AI can improve efficiency, it should not replace human interaction entirely. Catch up with the session here:
Should AI replace human agents?
In January 2024, the International Monetary Fund (IMF) warned AI could affect nearly 40 percent of all jobs – not just those related to contact centers or finance.
However, as outlined in CX Network’s guide to ethical AI guide for customer experience, human supervision of AI systems is critical to make sure they are being used responsibly and ethically.
There are many reasons for this, including:
- AI could make decisions that could harm customers or violate ethical principles and humans need the ability to intervene in such cases.
- Humans are needed for bias mitigation to prevent exclusion and discrimination of certain groups of customers, as well as hallucinations.
- AI can easily breach data protection rules if the right safeguards are not in place.
- AI can also lack the nuance and experience required to deal with vulnerable customers.
Where AI can make a difference in financial services
Despite the do nots, there are many instances of AI being proven to make a positive impact on the customer experience, particularly in finance.
Personalization: In May 2022, the Commonwealth Bank of Australia (CBA) launched the loyalty program CommBank Yello and AI plays a huge role in personalizing offers for individual customers. Matthew Malady, GM for customer engagement and communications for CBA says: “To ensure we create the most engaging experience we use AI to select the most relevant offers for each customer and present them in a tailored way. The blending of many different offers, cashback on certain products simply for having your relationship with CommBank, prize draws and ‘money can’t buy’ experiences has seen us deliver a highly unique proposition in Australian financial services.”
Passive VoC: AI can be used to analyze customer journeys and behavior, painting a more accurate picture of customer sentiment than traditional VoC methods can. Gustavo Saiago, director of product and CX Evangelist for Birdie, says: “Customers who remain silent may not be satisfied. Proactive feedback seeking and active listening are essential for uncovering hidden needs and improving products or services. Understanding customer sentiment beyond explicit feedback is crucial for business success.”
Seamless digital experiences: Jackson Ng, COO and CTO of Azimut Investment Management Singapore believes there are three ways AI can elevate financial services, particularly in wealth management. On how it can facilitate seamless digital experiences, he says: “The introduction of AI-driven virtual assistants ensures accessibility around the clock, transcending time zone limitations and fostering continuous communication. By embracing omnichannel engagement, AI facilitates interaction through various platforms, mitigating communication breakdowns that often hinder information retrieval.”
Building trust and transparency: According to Ng, it is even possible to build trust and transparency with AI, despite the potential for bias. Cybersecurity is one such area where AI can be invaluable. He says: “The compliance landscape benefits from AI's prowess as it streamlines regulatory processes, ensuring efficient adherence and minimizing associated risks. Moreover, AI's sophisticated algorithms can analyze transaction data, detecting anomalies and preventing financial crimes, fostering a more robust financial ecosystem. In the sphere of investment decision-making, AI utilizes data analytics to provide informed insights, reducing uncertainties and increasing transparency.”
Sentiment analysis: Powered by AI algorithms tapping into structured and unstructured data, sentiment analysis offers contact centers and CX professionals invaluable insights into customer emotions and preferences, enabling them to anticipate needs and proactively address potential pain points in the customer journey. At Toyota Finance New Zealand, tone sentiment monitoring capabilities are built into the contact center system. Credit operations manager Laurette Lane says: “This automatically pulls the data that comes in from all our customer interactions across the business. The sentiment analysis runs in the background to pull the data daily, giving us truly data-rich results.”
Meanwhile at Bank-al-Etihad, every customer interaction, online review and social media post about the bank is measured and paired with tens of thousands of survey responses using AI. This creates a 360-degree view of the customer, highlights CX improvement opportunities and facilitates deeper customer relationships.
In this video from All Access: Future Contact Centers 2024, the bank's CX director Ledi Lapaj, explains more.
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