53. Klarna Episode 3. Year In Review.
AI-driven customer service is their new thing. Also, let's talk Pokemon.
If you find this edition of value please feel free to leave a note in the comments. And if you’re so inclined, you can now even buy me a cup of coffee.☕️☕️☕️☕️☕️
So let’s get caught up on AI in the Ad World, shall we?
HEADLINES
** Niantic uses Pokémon Go player data to build AI navigation system.
This is one of the greatest apps ever (in my life). A shout out to my son Julian - he and I played Pokémon Go together on both coasts, in the Midwest, and our nightly neighborhood rumbles.
The company calls OUR creation …
… a "large geospatial model" (LGM), drawing parallels to large language models (LLMs) like the kind that power ChatGPT. Whereas language models process text, Niantic's model will process physical spaces using geolocated images collected through its apps. - Ars Technica
** AI-powered search engine Perplexity is venturing into e-commerce.
Last week, Perplexity unleashed its latest technological shoppertunity upon unsuspecting American shoppertunists. The company, ever-hungry for market dominance, has unveiled a shopping feature that ensnares its paying customers in an algorithmic web of "recommendations," trapping them within its search results. Most ominous of all, users can now complete their purchases without ever escaping to a retailer's website – another nail in the coffin of traditional e-commerce as we know it. - TechCrunch
** Suno v4 ushers in new era of AI-generated music
Better audio, sharper lyrics, and more dynamic song structures now available in beta to Pro & Premier. With its fourth major update, the music generation platform V4 introduces more “soulful” vocals, with things like grunts and breaths that add to the realism. Plus, it can now generate sharper lyrics and higher-fidelity audio.
- 11/19/24 Suno AI
FEATURE
Klarna - AI Year in Review
Goes Deep With AI Customer Service
Executive Summary:
1. RAPID AI ADOPTION
The impact of Klarna's AI assistant was immediate – within its first month, it processed two-thirds of all customer service cases, performing at a level that would typically require 700 full-time human representatives.
2. IMPROVED CUSTOMER EXPERIENCE
The AI system revolutionized service delivery, slashing average resolution times by over 80% – from 11 minutes to under two minutes – without compromising the quality of customer support compared to human agents.
3. GLOBAL REACH AND ACCESSIBILITY
Operating around the clock across 23 markets, the AI assistant communicates in 35 languages, positioning Klarna to save an estimated $40 million USD in 2024. While customers retain the option to speak with human agents, the system's multilingual capabilities have particularly enhanced service accessibility for immigrant and expat communities.
Klarna’s AI assistant is working harder than most of us.
“We push everyone to test, test, test and explore. As Klarna continues to discover applications for OpenAI’s tech, there’s the potential to take the business to new heights. We’re aimed at achieving a new level of employee empowerment, enhancing both our team’s performance and the customer experience.”
Sebastian Siemiatkowski, Klarna Co-founder and CEO
When ChatGPT emerged in November 2022
Klarna's Co-founder and CEO Sebastian Siemiatkowski moved swiftly to capitalize on its potential. The company soon achieved dual firsts – launching Europe's first ChatGPT plugin and becoming the global fintech industry's earliest adopter, laying the foundation for more ambitious AI initiatives.
Klarna, the buy-now-pay-later company, is changing how we think about AI in customer service. Following its partnership with OpenAI last year, Klarna’s AI assistant has delivered impressive results just one month after launch.
Massive Improvement in Customer Communication
Serving Klarna's 150 million customers worldwide, the OpenAI-powered assistant streamlines the shopping and payments journey through multilingual support, automated refund processing, and proactive financial advisory services.
It handled 2.3 million conversations in its first month; 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 didn’t just handle the volume, it also improved efficiency.
It is more accurate in errand resolution, leading to a 25% drop in repeat inquiries. Resolutions were cut by nine minutes and customer satisfaction scores stayed steady.
Customers now resolve their errands in less than 2 mins compared to 11 mins previously.
The implementation cost $2-$3 million, with a projected $40 million profit in 2024.
It’s available in 23 markets, 24/7 and communicates in more than 35 languages.
Refunds in 35 languages
The assistant works in over 35 languages, helping with everything from refunds to financial advice. Human agents are still available for more complex queries, while AI focuses on simpler tasks.
Despite its success, the AI assistant has sparked concerns. Two years ago, Klarna laid off 700 employees — the same number the AI now replaces.
Klarna denies a direct link between the layoffs and its AI investment, saying the roles were reassigned within its global service partners, which employ over 650,000 people. However, the timing has raised questions. But then in 2023, the company announced a hiring freeze which was confirmed to be partially due to AI reasoning.
The AI assistant costs $2–$3 million to develop and is expected to bring in $40 million in profits. Klarna’s AI shows how businesses can improve customer service and efficiency with technology.
Yet, it also reminds us of the need to carefully balance innovation with its effect on workers.
ChatGPT Enterprise Across The Organization
Klarna’s adoption of AI hasn’t been limited to its products—it extends deep into the organization as well. Klarna has made ChatGPT Enterprise available to all its employees around the globe, enabling access to the power of OpenAI in the familiar and easy-to-use ChatGPT interface, with protected company data.
90% of Klarna’s employees are using generative AI tools powered by OpenAI daily.
Their success spans across the org, with Communications, Marketing, and Legal teams seeing adoption rates of 93%, 88%, and 86% respectively.
Klarna is seeing a wide variety of additional use cases, from building software to streamlining customer service.
So what’s next?
Klarna Plans to ‘Shut Down SaaS Providers’ and Replace Them With Internally Built AI. The Tech World Is Pretty Skeptical
The buy-now-pay-later giant is leaning into automation and slashing its partnerships with Salesforce and Workday.
Klarna is no longer using Salesforce, a platform that aggregates and packages sales and marketing data for businesses. The company has also removed the HR and hiring platform Workday from its tech stack, a Klarna spokesperson confirmed to Inc.
As rumors circulate about Goldman Sachs' involvement in a potential IPO, Klarna's aggressive AI strategy and push toward profitability could strengthen its position for going public.
If you find this edition of value please feel free to leave a note in the comments. And if you’re so inclined, you can now even buy me a cup of coffee.☕️☕️☕️☕️☕️
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Thanks for the read!
-pb
I'm very sorry to hear about your loss, and wholeheartedly understand how it changes perspective. Our time is not guaranteed and hope we can all chew on that during our normal days.
Pun accepted, and you are very much on fire today. I keep wondering when we'll reach that AI inflection point when Ian Malcombe gets his day and people will wonder, "Your [AI] scientists were so preoccupied with whether they could, they didn't stop to think if they should.". The lawsuits are finally here (as anticipated), but the FOMO mentality of copyright/ethics/common sense be damned "I'm not getting left behind" continues. Wild times.