Klarna is seeking a US banking charter to push things beyond buy now, pay later

KlarnaThe Swedish fintech company, known for its buy-now-pay-later offerings, said Monday it has applied to federal and state regulators to set up a U.S. banking subsidiary.

If approved, Klarna Bank USA will be an FDIC-backed institution headquartered in Utah, the company said. The proposed bank will be led by Gary Harding, former CEO of Milestone Bank and Prime Alliance Bank, according to Klarna.

“We have seen first-hand the desire for a fairer and more transparent approach in the US, and our banking license is the natural next step,” said Sebastian Siemiatkowski, co-founder and CEO of Klarna.

He added that the move will give “customers tools to borrow responsibly and build financial confidence, while bringing greater competition, innovation and choice” to the market.

Klarna’s app is the latest sign that fintech companies, which often partner with US banks to provide services, now see having their own charters as a major advantage. In April, fintech provider Mercury said it had received conditional approval to set up its own bank, joining a wave of fintech and cryptocurrency companies seeking to enter the traditional banking system.

Klarna said its charter, if approved, would allow it to bring its banking operations in-house and enhance reliability across payments, credit and merchant services.

The app represents Klarna’s latest step towards becoming a broader consumer bank rather than just a buy now, pay later provider. Last month, Klarna introduced high-yield savings accounts to US customers, although these accounts are held by its partner WebBank.

By owning a bank, fintech companies can fund loans with their own customer deposits rather than more expensive wholesale financing, offer checking accounts and credit cards directly and rely less on third-party banking partners.

Klarna, which went public last September, is trading at about half its initial public offering price of $40.