Klarna Files for US Bank License to Compete with Traditional Banks

Klarna, the buy now/pay later (BNPL) provider and aspiring neobank, has filed applications with the Utah Department of Financial Institutions and the Federal Deposit Insurance Corp. (FDIC) to establish Klarna Bank.

Details of the Application

The move involves a formal request for a state bank charter in Utah, which would allow Klarna to accept deposits, make loans, and offer other financial products under US regulatory oversight. The company has not disclosed the expected timeline for approval.

Company's Position

Klarna views obtaining a bank charter as a way to offer broader, more integrated financial services, transitioning from a payment intermediary to a full-fledged bank. The company has emphasized its commitment to complying with US banking regulations.

Precedents and Context

Other fintech companies such as SoFi and Varo have previously obtained bank charters in the US, paving the way for new competitors. This move comes amid increasing regulatory scrutiny of BNPL providers.

Potential Financial Impact

If approved, the charter could reduce Klarna's funding costs and improve profit margins, but the approval process may take months. Competitors like PayPal (PYPL) could face new competition from a digital bank.