Artificial Intelligence at Klarna: 24/7 without a day off

Startup Klarna replaces 700 employees with artificial intelligence

Swedish fintech startup Klarna claims that artificial intelligence has replaced 700 employees in one fell swoop, raising fears about a future in which millions of jobs will simply become redundant.

The data published by Klarna, a shopping finance service, is quite revealing. It's an OpenAI-based automated chatbot, accessible from the startup's app, which is already capable of handling two-thirds of all customer communications, equivalent to around 2.3 million conversations. According to the report, the virtual assistant based on generative artificial intelligence received satisfaction ratings similar to those received by human agents.

The AI-powered virtual chatbot is capable of performing refunds, canceling reservations, and even resolving disputes. All this, according to the Swedish startup, has made it possible to do without about 700 employees.

Using automated systems to answer simple questions in chat rooms is nothing new; it has been used for years, with varying degrees of success. But using generative artificial intelligence allows for a much closer relationship between customer and machine, using natural and spoken language. In many cases, especially when asking simple questions, the user may not realize they are talking to artificial intelligence.

Klarna, which was once Europe's most expensive fintech company, has been criticized for the way it handled layoffs. In the summer of 2022, its CEO Sebastian Siemiatkowski published a spreadsheet on LinkedIn with the names of some of the laid-off employees.

At that point, 700 people had been laid off - 10% of its total workforce. Then, in December 2023, the company announced a hiring freeze, in part because the introduction of artificial intelligence impacted the need for a larger customer support team.

According to Klarna's statement to Fast Company, the workforce savings from artificial intelligence are "unrelated to the larger layoffs of 2022," they explain. "We decided to share this data to explain the long-term implications of artificial intelligence. We think it's important to be transparent to create a better understanding at a societal level and to be able to talk about how we're going to manage this transformation."

According to the startup, the virtual assistant based on generative artificial intelligence is available in 23 markets and can speak 35 different languages. They also claim that they have been able to improve communication with migrant communities in all their markets. Furthermore, they remind that this assistant is not only equivalent to a human in terms of customer satisfaction, but is also available 24/7.

Klarna estimates that replacing 700 employees with an artificial intelligence for after-sales service will increase profits by around €40 million per year in 2024.


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