FinTech Company Klarna Fires 700 in AI Shift, Now Desperate to Hire Humans After $40B Loss

Artificial Intelligence is clever but cannot outsmart humans. This is proved by the recent scenario at a Swedish FinTech firm that laid off most of its employees in a significant AI transformation. 

Klarna, a FinTech company with a valuation of $46 billion at its peak, is now regretting its choice of valuing artificial intelligence over human employees. The company made headlines in 2024 by laying off about 700 employees in a push to fully automate its operations and increase its reliance on AI. The co-founder and CEO of the company Sebastian Siemiatkowski, who at the time had stated that "AI can already do all of the jobs that we, as humans, do," now feels that "investing in the quality of the human support is the way of the future for the company."

The shift was mainly to cut down on costs and improve efficiency in a rapidly competitive market. Siemiatkowski had publicly celebrated AI’s ability to handle tasks typically managed by humans. However, that optimism has not aged well. After the AI-driven revolution, Klarna went through a series of operational and reputational issues. Complaints from customers skyrocketed as users complained about robotic and frequently unresponsive interactions with AI interfaces, particularly in customer support. Although automation helped cut short-term costs, it seems to have impacted user satisfaction and loyalty, two major factors for any consumer-facing company.

Adding to the woes, Klarna's valuation has dropped by $40 billion since its peak. Experts blame both the state of the world economy and the firm's internal choices. But the AI bet failure is now widely regarded as a major turning point.

On the flip side of the story, Siemiatkowski has now come around to valuing the human workforce. According to a report by Bloomberg, he confessed that human support workers provide an element of empathy, subtlety, and trust that AI systems are still far from matching. " From a brand perspective... It's critical to make it clear to your customers that a human will always be there if they need one.”

Klarna is now said to be on a recruitment drive, attempting to recreate its human teams especially those in customer service and operations. Not just new recruitments, the company is also working on its working style offering flexible work from home jobs and work timings. 

Read more: After White Genocide, Musk’s Grok AI Gives Holocaust Takes, Blames Bug