Klarna digital payments Klarna is a digital-born business. It was founded in Stockholm, Sweden in 2005, and now has over 3,500 employees, known as Klarnauts, and offices across three continents. The business is recognised as one of Europe's largest banks and was started by three master's students at Stockholm School of Economics: Sebastian Siemiatkowski, Niklas Adalberth and Victor Jacobsson. The Stockholm School of Economics had an entrepreneurship competition, similar to Dragon's Den or Shark Tank, and Siemiatkowski, who had worked in a financial services telephone call centre, thought there could be an opportunity for easier online payments. The team presented their business idea known as InvoiceMe which was an idea for an easy (smooth) online payment system that allowed online shoppers to pay in instalments. But the presentation didn't go well and the trio's idea of 'Buy now pay later online was not popular with the jury. In fact, it came last, but one of the people at the event said that traditional banks would never offer the service, so the trio should go for it. The three friends decided to see if the business worked and agreed a trial. If it didn't work after six months, they would get proper jobs. Later that year, the company launched and in 2010 Klarna opened offices in Ger- many and the Netherlands. The company continuously innovates and in 2017 the app was launched. More investors joined the business, including the retailer H&M and the rapper Snoop Dogg - who temporarily changed his name to Smoooth Dogg (for an advertising campaign)! The product offer allows customers to spread payments and to do one of thron The product offer allows customers to spread payments and to do one of three things: 'Pay Later' which means between 14 to 30 days after purchasing 'Pay in Three' where they repay in three equal statements 'Slice It' where customers repay in instalments for anything from three months to three years Klarna has two customer groups: the consumers who use the buy now pay later system to manage their finances and the online stores that offer Klarna as a payment system. Nearly one billion consumers use Klarna for shopping. In its own research, Klarna found that 67 per cent of its customers use the payment option as a method of spreading the cost of a purchase into smaller, more manageable amounts. Over 250,000 retailers trust Klarna globally, including ASOS, Etsy, IKEA, Nike, North Face, Ralph Lauren, Samsung and Sephora. Well established in Europe and North America, the service is growing in Australia and New Zealand. There are growing concerns about buy now pay later systems which has become an area where regulation is moving in, and Klarna works closely with official financial authorities providing advice and sharing its insights. (Continued) 18 DIGITAL MARKETING ESSENTIALS Case questions Klarna has demonstrated that it's an innovative company and is a keen adopter of new technology. How else might the company make use of online data and technology