How Klarna uses AI

Author

Ben Tossell
March 07, 2024

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In today’s post, I’ll cover:

  • Klarna’s journey with AI - how they (very) quickly focused on being ‘AI-powered’ internally and in their product

  • Their recent Annual Report’s mention of AI and how it’s changing their business

  • AI’s impact on taking jobs at Klarna

I received an anonymous tip from an ex-Klarna employee in December 2023:

Their medium to long-term bet is that they can drastically reduce the headcount of the company using AI.

They're using layoffs as well as natural attrition as a way to work AI into how the company operates. Not the product, but their ways of working.

If someone leaves a team, the management has said "figure out how to use AI to make it work without them" forcing teams to work smarter.

Fast-forward to today:

Klarna today announced its AI assistant powered by OpenAI. Now live globally for 1 month, the numbers speak for themselves:

The AI assistant has had 2.3 million conversations, two-thirds of Klarna’s customer service chats

It is doing the equivalent work of 700 full-time agents

It is on par with human agents in regard to customer satisfaction score

It is more accurate in errand resolution, leading to a 25% drop in repeat inquiries

Customers now resolve their errands in less than 2 mins compared to 11 mins previously

It’s available in 23 markets, 24/7 and communicates in more than 35 languages

It’s estimated to drive a $40 million USD in profit improvement to Klarna in 2024

Those numbers really are something!

Some maths from folks on Twitter (X) suggest that 2.3M conversations with an average of 4 replies put the cost at delivering those messages could be ~$80k - $120k.

The CEO confirmed that it has required an investment of about $2-3M to create. So it’s unknown whether the cost of delivering those messages is included there or if it was just the cost to build.

The $40M in profit improvement is due to the difference in budgeted spending using their customer service provider with 3000 agents against the 700 less they need.

He also confirmed that:

this is not a co-pilot, this is AI performing and concluding the conversations and errands by itself.

before we took this live, we already had a co-pilot that helped customer service agents and other employees accelerate their work

The AI Assistant works by leveraging any content available on the website plus any other content the Klarna team added as a knowledge base. If a conversation doesn’t get a satisfactory reply, they create them.

This method is how many companies are building their AI support bots, including Deel which I covered previously.

We’ll dive into more numbers and the consequences of Klarna’s AI focus below.

Klarna’s journey with AI

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