Klarna launches bank account service in Germany

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ayments fintechs have been attempting to penetrate the banking sector for some time now and that isn’t going to change anytime soon. This month, BNPL outfit Klarna rolled out consumer bank accounts in Germany that will allow customers to shop and bank using one app.

The buy now pay later (BNPL) company said that the service will be initially available to a limited number of its loyalty members. It aims to make the product available to a wider audience in coming months.

The full-fledged bank account will come with a German IBAN and allow customers to receive money, set up direct deposits and debits. Customers will also receive Visa debit card, which will work with Google Pay and Apple Pay.

The move by Klarna demonstrates its goal of breaking into the wider financial market. But will it turn out to be a move worth making?

For instance, the most successful challengers such as Monzo and Revolut are still yet to turn a profit. It was only in Q4 last year that Starling became the first challenger to become profitable.

The thing I am getting at is – Can Klarna offer anything different to what customers are already getting from traditional incumbents?

Time has told us that consumers are unlikely to make challenger accounts their main current account, often only using them to save money and budget – this is where it becomes hard for challengers to make a profit.

Klarna is not the only fintech looking to move into retail banking - closely following Klarna’s announcement, UK payments fintech TransferWise rebranded as Wise to focus its efforts on offering banking services.

The fintech was recently valued at $5bn, with its cross-border money transfer service deemed as a success. Its move into banking during its tenth year in operation marks the company’s determination to expand. Will it be a success? Only time will tell.