Klarna Shifts Gears: AI for the Masses, Humans for VIP Service

Klarna CEO says company will use humans to offer VIP customer service | TechCrunch

"My wife taught me something," Klarna CEO Sebastian Siemiatkowski told the crowd at London SXSW. He was addressing the headlines about the company looking to hire human workers after previously saying Klarna used artificial intelligence to do work that would equate to 700 workers. "Two things can be true at the same time," he said. Siemiatkowski said it's true that the company looked to stop hiring human workers a few years ago and rolled out AI agents that have helped reduce the cost of customer support and increase the company's revenue per employee. The company had 5,500 workers two years ago, and that number now stands at around 3,000, he said, adding that as the company's salary costs have gone down, Klarna now seeks to reinvest a majority of that money into employee cash and equity compensation. But, he insisted, this doesn't mean there isn't an opportunity for humans to work at his company. "We think offering human customer service is always going to be a VIP thing," he said, comparing it to how people pay more for clothing stitched by hand rather than machines. "So we think that two things can be done at the same time. We can use AI to automatically take away boring jobs, things that are manual work, but we are also going to promise our customers to have a human connection." He spoke about how the company plans to balance employees and AI workers. Siemiatkowski said that right now, engineering positions at the company haven't shrunk as much as those in other departments, but he notes that this could shift. "What I'm seeing internally is a new rise of business people who are coding themselves," he said, adding that the challenge many engineers have these days is that they are not business savvy. "I think that category of people will become even more valuable going forward," Siemiatkowski continued, especially as they can use AI and put their business understanding to good use. He himself is using ChatGPT to help him learn to code and help him understand more of the data side of Klarna. He said doing this has helped Klarna become a better company. Before, he thought he would never catch up in learning what was needed to take a more present role in database conversations at the company. "I'll take a Slack thread, I'll throw it in ChatGPT and say, 'this makes sense, right?" he said, adding that he uses ChatGPT like a private tutor. But he is also aware that AI isn't just about employees. He spoke of the increase in scams and how it impacts high-trust societies like his native Sweden. The Financial Times recently reported on the rise of fintech scams pointing out, for example, how susceptible residents in Singapore can be to them because they are more naturally trusting of various institutions. "And AI is obviously accelerating this," Siemiatkowski said. Siemiatkowski also once again addressed why the company stopped using Salesforce and Workday, saying it was because Klarna wanted to consolidate its data in a way that would be easier to feed into AI. He said, for example, if Klarna wanted to gather information about one of its clients, it would have to go through the Google Suite, Slack, Workday, Salesforce, and so forth. "We realize that the only way forward is going to be to consolidate [data]," he said, adding that the company stopped using around 1,200 small software services. About it's pending IPO? He indicated that Klarna could soon move ahead with it but was otherwise non-committed. "I can say that I'm happy there's less turbulence in the market," he said with a smile. And if he had a magic wand and could change one thing? He would make the U.K. part of the EU again. The crowd then erupted into applause.

Did Klarna's AI reliance affect customer service quality?

The company blames outsourced human customer service agents for the dip in quality. Swedish fintech giant Klarna has been heavily reliant on artificial intelligence for years now, prioritising the technology to deal with a growing volume of its workload over human employees. Recently, however, the company's co-founder and CEO Sebastian Siemiatkowski recently admitted that a "lower quality" of service is leading them back to hiring more human workers. Since 2022, the 'buy now, pay later' start-up has slashed its staff count by 2,000. Klarna also hadn't hired a single human in 2024. Last year, the company announced that its AI assistant (powered by OpenAI), handled 700 agents worth of workload - or 2.3m conversations with customers. That number has now gone up to the equivalent of 800 full-time agents. At the time, it said that customer satisfaction with AI agents was on par with humans - something it still maintains. "I am of the opinion that AI can already do all of the jobs that we, as humans, do," Siemiatkowski told Bloomberg last year. Later, in an X post, he stood his ground and said that AI could also do his own job. However, in a more recent conversation with Bloomberg, Siemiatkowski suggested that the job cuts resulted in a "lower quality" of customer service. "As cost unfortunately seems to have been a too predominant evaluation factor when organising this, what you end up having is lower quality," he said. A Klarna spokesperson elaborated on what Siemiatkowski meant in a comment to SiliconRepublic.com. According to the spokesperson, the CEO's statement to Bloomberg referred to the cost of outsourced human agents and not AI as to what caused the service quality to falter. "Some customers get an amazing agent, some a less engaged agent, prompting repeated contacts and higher costs." To address this, Klarna is hiring freelancers on a part time basis to handle complex issues "more consistently" than its current outsourced set-up. 'Overzealous' mistake Forrester principal analyst Christina McAllister believes that Klarna went wrong in the same way many companies do, by "underestimating the complexity of their customer service operations," combined with an "overzealous pursuit of cost reduction". Customers have been conditioned to expect low quality when it comes to automated services, McAllister says, especially considering the barrage of mediocre chatbots they dealt with for nearly a decade. It takes time to change that perspective. Aggressive AI adoption is not what resulted in the low-quality service experience, the analyst explains. Rather, it was the company's "overeager" headcount reduction. AI models are becoming much more useful as time passes and indeed they will at some point be able to provide a similar level of customer satisfaction when compared to humans. But they are yet to reach that. "They will struggle with novel scenarios, nuanced exceptions, high emotionality - all areas where humans excel," McAllister says. So, companies that adopt AI while maintaining human experts as 'backup' will see far more success than those who "move too quickly" like Klarna. Klarna's strategy and its result should be a lesson for companies to leverage AI in customer service with more nuance. According to the analyst, a "heavy-handed" cost reduction via self service can erode customer trust and satisfaction. The company is shifting course by hiring part-time customer service workers. This new pilot programme aims to improve the "human part" of Klarna's customer service, the company spokesperson said. The rare recruitment drive, the first in more than a year, has hired six remotely working freelance agents as of now, and could expand to around 100 freelancers if proven successful. For the fresh infusion, Klarna intends to tap into its own user base. "We also know there are tons of Klarna users that are very passionate about our company and would enjoy working for us," Siemiatkowski told Bloomberg. The Klarna spokesperson maintains that the company is still "committed to being AI-first". "This pilot isn't a reversal of our AI strategy." According to the company, its AI agent resolves queries in about two minutes, when compared to the 12 minutes humans take - saving it an estimated $39m in 2024. "However, we believe in a world of AI nothing will be as valuable as humans. We'll always offer a clear path to a live agent, and we're investing in higher paid part-time human roles so agents can handle nuanced issues quickly and efficiently for our customers." Don't miss out on the knowledge you need to succeed. Sign up for the Daily Brief, Silicon Republic's digest of need-to-know sci-tech news.

Klarna's 'overzealous' AI-led cost reduction hits quality

The company blames outsourced human customer service agents for the dip in quality. Swedish fintech giant Klarna has been heavily reliant on artificial intelligence for years now, prioritising the technology to deal with a growing volume of its workload over human employees. Recently, however, the company co-founder and CEO Sebastian Siemiatkowski admitted that a "lower quality" of service is leading them back to hiring more human workers. Since 2022, the 'buy now pay later' start-up slashed its staff count by more than 2000. Last year, the company announced that its AI assistant (powered by OpenAI), handled 700 agents worth of work load - or 2.3m conversations with customers. That number has now gone up to 800 full-time agents. At the time, it said that customer satisfaction with AI agents was on par with humans - something it still maintains. Plus, Klarna also hadn't hired a single human in 2024. "I am of the opinion that AI can already do all of the jobs that we, as humans, do," the CEO told Bloomberg in last year. Later, in an X post, he stood his ground and said that AI could also do his own job. However, in a more recent conversation with Bloomberg, Siemiatkowski suggested that the job cuts resulted in a "lower quality" of customer service. "As cost unfortunately seems to have been a too predominant evaluation factor when organising this, what you end up having is lower quality," he said. A Klarna spokesperson elaborated on what Siemiatkowski meant in a comment to SiliconRepublic.com. According to the spokesperson, the CEO's statement to Bloomberg referred to the cost of outsourced human agents and not AI as what caused the service quality to falter. "Some customers get an amazing agent, some a less engaged agent, prompting repeated contacts and higher costs." To address this, Klarna is hiring freelancers on a part time basis to handle complex issues "more consistently" than its current outsourced set up. 'Overzealous' mistake Forrester principal analyst Christina McAllister believes that Klarna went wrong in the same way many companies do, by "underestimating the complexity of their customer service operations," combined with an "overzealous pursuit of cost reduction". Customers have been conditioned to expect low quality when it comes to automated services, McAllister says, especially considering the barrage of mediocre chatbots they dealt with for nearly a decade. It takes time to change that perspective. Aggressive AI adoption is not what resulted in the low-quality service experience, the analyst explains. Rather, it was the company's "overeager" headcount reduction. AI models are becoming much more useful as time passes and indeed they will at some point be able to provide a similar level of customer satisfaction when compared to humans. But they are yet to reach that. "They will struggle with novel scenarios, nuanced exceptions, high emotionality - all areas where humans excel," McAllister says. So, companies that adopt AI while maintaining human experts as 'backup' will see far more success than those who "move too quickly" like Klarna. Klarna's strategy and its result should be a lesson for companies to leverage AI in customer service with more nuance. According to the analyst, a "heavy-handed" cost reduction via self service can erode customer trust and satisfaction. The company is shifting course by hiring part-time customer service workers. This new pilot programme aims to improve the "human part" of Klarna's customer service, the company spokesperson said.. The rare recruitment drive, the first in more than a year, has hired six remotely working freelance agents as of now, and could expand to around 100 freelancers if proven successful. For the fresh infusion, Klarna intends to tap into its own user base. "We also know there are tons of Klarna users that are very passionate about our company and would enjoy working for us," Siemiatkowski told Bloomberg. The Klarna spokesperson maintains that the company is still "committed to being 'AI first'". According to the company, its AI agent resolves queries in about 2 minutes, when compared to the 12 minutes humans take - saving it an estimated $39m in 2024. "This pilot isn't a reversal of our AI strategy." Don't miss out on the knowledge you need to succeed. Sign up for the Daily Brief, Silicon Republic's digest of need-to-know sci-tech news.

Company that sacked 700 workers with AI now regrets it -- scrambles to rehire as automation goes horribly wrong

Klarna AI layoffs have taken a surprising turn. The Swedish fintech giant, once praised for firing 700 employees and replacing them with artificial intelligence, is now reversing that decision. Klarna CEO Sebastian Siemiatkowski admitted that relying too heavily on AI led to poor customer service and falling satisfaction levels. With complaints rising and users frustrated, Klarna is now rehiring humans to restore service quality. The company's bold AI-first strategy didn't deliver as expected. This real-world example shows the risks of replacing people with tech too soon -- and why the human touch still matters in customer support.Klarna regrets replacing 700 employees with AI, now rehiring humans after customer service failures- Klarna, the popular Swedish fintech company known for its "buy now, pay later" service, is walking back one of its most controversial decisions. After firing 700 employees and automating their jobs with artificial intelligence, the company now admits the move may have gone too far. Klarna CEO Sebastian Siemiatkowski has publicly acknowledged that while AI promised speed and cost savings, it came at the cost of customer satisfaction and service quality. The fintech giant, once valued at $45.6 billion in 2021, was one of the loudest voices championing AI in customer operations. But by 2024, the consequences of that AI-first approach were too obvious to ignore. Back in 2022, Klarna made headlines when it laid off around 700 workers, a significant portion of its workforce at the time. CEO Siemiatkowski was vocal about embracing AI tools that could take over tasks such as customer support, translation, content creation, and even executive-level decision-making. He believed these tools could match, or even exceed, human performance. In interviews and public statements, he claimed the company had managed to automate the equivalent of 700 roles. The move was framed as a bold step toward innovation and cost-efficiency during uncertain market conditions. Fast forward to 2024, and things didn't go as planned. Klarna began facing a surge in customer complaints, a dip in user satisfaction, and growing frustration with the AI systems that had replaced its human workforce. According to reports from Livemint and The Economic Times, Klarna's AI tools struggled with more nuanced support tasks -- especially those that required empathy, discretion, or deeper understanding of user issues. Customers complained that automated responses were too generic, repetitive, or simply unhelpful when dealing with real-life problems. CEO Siemiatkowski later admitted the company's overdependence on automation led to a "lower quality" customer experience. This public acknowledgment marked a shift in Klarna's strategy -- from full-speed AI deployment to rebalancing the human element in service. Yes, Klarna is now actively rebuilding its human support teams, a sign that it recognizes the value real people bring to customer interactions. The reversal shows a clear change in Klarna's priorities: from purely chasing AI-driven efficiency to restoring trust, service quality, and brand reputation. Siemiatkowski's tone has changed as well. In his recent remarks to multiple media outlets, he admitted, "We went too far." He stressed the importance of striking the right balance between human workers and artificial intelligence, a lesson that could influence the broader fintech and tech industry. Klarna's experience serves as a cautionary tale for businesses rushing to replace employees with AI. While AI tools can offer impressive speed and cost savings, they still lack the human touch needed in complex customer service situations. Other tech firms and startups may now think twice before eliminating large parts of their workforce, especially when customer experience is at stake. AI is a powerful tool, but it's not a full substitute for people -- at least not yet. This incident has pushed the conversation toward collaborative models, where AI assists human agents rather than replacing them outright. Tools like chatbots can handle simple, repetitive queries, but when emotions, trust, or complex issues are involved, people still want to talk to people. Klarna's pivot back to human hiring is a strong signal that the future of AI isn't about replacing jobs -- it's about enhancing them with smarter tools and better support systems. It's also a reminder that companies should listen closely to their customers, even when chasing innovation. The Klarna AI layoffs story isn't just about one company's failed experiment -- it's about how tech companies around the world are learning what AI can and can't do. Klarna's $45 billion dream hit a reality check when customer complaints started flooding in. Now, with a more balanced strategy, Klarna is working to rebuild both its workforce and its trust with customers. The takeaway? Automation may be the future, but the present still needs a human touch. Q1: Why did Klarna fire 700 employees for AI? To automate customer service and cut costs. Q2: Is Klarna hiring humans again after AI layoffs? Yes, due to poor service quality and customer complaints.

AI For The Masses, Humans For The Elite: Klarna CEO Details Dual-Tier Strategy Amid Growing Demand For Human Connection

Enter your email to get Benzinga's ultimate morning update: The PreMarket Activity Newsletter AI chatbots for regular folks, human beings for VIPs: that seems to be Klarna's policy, based on CEO Sebastian Siemiatkowski's recent remarks. What Happened: Speaking at the London SXSW, Siemiatkowski noted that Klarna has reduced its workforce from 5,500 to approximately 3,000 after AI came into the picture. "We can use AI to automatically take away boring jobs, things that are manual work," he said. He added that with lower salary expenses, the company now plans to redirect much of those savings toward increasing employee pay and equity incentives. He went on to highlight Klarna's differentiated approach to regular customer support and premium service. "We think offering human customer service is always going to be a VIP thing," he said, drawing parallels to the way people pay more for handmade goods. "We can do both -- lean on AI to handle the repetitive stuff while still promising our customers a human connection when it really matters." See Also: Chief AI Scientist At Mark Zuckerberg's Meta Says 'No Way' Scaling ChatGPT-Like Models Is Going To Lead To Human-Level AI Why It Matters: Siemiatkowski's recent comments come after he noted last month that "from a brand perspective", it is "critical" for the customer to know "that there will be always a human if you want." This is a shift from the company's earlier move to solely use AI chatbots to handle customer interactions, which proved to be challenging. Venture Capitalist Chamath Palihapitiya responded to this shift by observing that such challenges could lead startups to "pivot to simply use AI for narrow use cases." In the case of Klarna, the pivot seems to be towards drawing a line between what regular customers are provided and premium services for VIPs. "Humans are more expensive, and rich people are willing and able to pay for them," wrote NYT tech reporter Nellie Bowles. Milton Pedraza, chief executive of the Luxury Institute, said, "What we are seeing now is the luxurification of human engagement." Commenting on the intrinsic value of human connection, he said, "The positive behaviors and emotions human engagement elicits -- think the joy of a massage. Now education, health care stores, everyone, is starting to look at how to make experiences human. The human is very important right now." Read Next: Amazon Expands Cloud, AI Footprint With $10 Billion Data Center Investment In North Carolina Photo courtesy: Shutterstock Market News and Data brought to you by Benzinga APIs

Klarna Promises Customers 'Human Connection' Amid AI Adoption | PYMNTS.com

"We can use AI to automatically take away boring jobs, things that are manual work, but we are also going to promise our customers to have a human connection," Siemiatkowski said, per the report. Siemiatkowski said that Klarna's AI agents have helped lower the cost of customer support and that the company has reduced its workforce from 5,500 to 3,000 over the past two years, according to the report. He added that there have been fewer reductions in engineering positions than in other roles, but that the trend could change because businesspeople, including himself, are learning to code. In his case, he's doing so with the help of ChatGPT, per the report. Siemiatkowski also addressed the implications of AI in a Friday (May 30) thread on X. In two posts in the thread, he said that amid Klarna's adoption of AI, the company launched an "always human" initiative. "This means more of our employees have even more time to help and interact with our customers ... solving the more difficult and complex challenges, errands, complaints and topics. And provide a more human touch support to them," Siemiatkowski wrote in the posts. He added that this also allowed Klarna to reduce its dependence on outsourcing. In a reply to a question asking about departments in which Klarna hires more due to AI, Siemiatkowski said: "Sales and 'always human', everything customer facing." It was reported May 8 that Klarna was rethinking some of its AI-centered cost-cutting and undertaking a hiring effort to make sure customers always have the option of talking to a human customer service rep. "From a brand perspective, a company perspective, I just think it's so critical that you are clear to your customer that there will always be a human if you want," Siemiatkowski told Bloomberg at the time.