Mixed messages from Klarna about plans for more AI, fewer humans

Swedish Fintech company Klarna’s approach to the use of AI as opposed to live employees remains unchanged, a spokesperson for the firm said on Monday.

John Kraske was responding to a news report from Bloomberg stating that CEO and co-founder Sebastian Siemiatkowski believes the company’s “pursuit of cost-cutting in customer service, fueled by advancements in artificial intelligence, has gone too far.”

Last year, Siemiatkowski had indicated that Klarna is planning to get rid of almost half of its employees through efficiencies arising from its investment in AI. A report from the BBC at the time noted that the company, which provides payment processing services for the e-commerce sector, had already reduced its head count from 5,000 to 3,800, and wants to reduce its workforce to 2,000 by using AI in marketing and customer service.

The current Bloomberg report noted that Siemiatkowski now says that Klarna plans to recruit a “new cohort of employees in an ‘Uber type setup’ where they can log in and work remotely, with a view to eventually replacing the few thousands human agents that Klarna currently resources.” That cohort currently numbers only two.

Kraske, global press office lead for Stockholm-based Klarna, responded to CIO.com’s question about when Siemiatkowski changed his recruiting plans and why, by saying via email, “this isn’t a major change — more of a refinement to a strategy that’s already delivering strong results. Klarna’s AI assistant is now doing the work of 800 full-time roles, up from 700 just a year ago.”

The company, he said, “continues to invest heavily in AI and [is] proud of how it’s transforming customer service. What’s new is that we’ve hired two highly experienced agents as part of a small pilot to complement the AI assistant. Our broader approach remains unchanged — we’re not currently rehiring employees who choose to leave.”

Customers still want to talk to people

Terra Higginson, principal research director at Info-Tech Research Group, said, “AI is enabling the 4th revolution in customer service, and this revolution is fundamentally about putting people first, whether they are customers or employees.”

She added, “the real opportunity lies not in cutting costs or replacing humans but in using technology to help us do our jobs better and create better customer experiences. I see a growing pushback against companies prioritizing AI over people, largely because this technology should enable us to do our jobs better, not replace us.”

In reaction to the Bloomberg article, Higginson said “Klarna realized that customers still want to talk to real people, and they’re not wrong. This isn’t the first time a company has misjudged the service model. Many of us are all too familiar with rage-clicking and shouting ‘human’ repeatedly into a phone out of frustration.”

She said, “over the past few decades, we’ve lost the human touch with the rise of dead-end chatbots and offshore call centers. In fact, during this time, automated and remote customer service has led to a significant decrease in satisfaction and plummeting [customer satisfaction] scores: 67% of customers report hanging up out of frustration, one in 25 report rage-clicking, and 65% say they’ve left a brand after just one bad experience.” 

It does, she said, “take 12 positive experiences to make up for just one bad one. That’s how costly a service failure can be. Klarna’s move to reintroduce human interaction is not surprising. Customer service AI really is about providing an excellent experience to both employees and customers, and keeping a human in the loop increases trust, enhances usability, and helps build a stronger, more dynamic workforce.”

In a recent report,  Higginson wrote that that the 4th evolution of customer service is “dramatically reducing wait times, personalizing customer experiences, and giving agents the tools they need to perform their jobs better. Over the next year, AI will revolutionize customer service by improving the experience for both agents and customers, driving efficiencies and potential cost savings. This rapid evolution of traditional call centers and chatbots means that those who don’t adopt will fall behind.”

Gartner analyst James Plath, however, stated, “there are a lot of bold proclamations being made about workforce disruption due to AI, but the reality is much more muted.”

Companies, he said, “are still understanding and evaluating AI-driven impacts to the workforce, and while there are opportunities for compression — in time, in role, in teams — this will take time to translate to new roles and impacted roles. Companies are embracing, but for the most part they are being intentional, not brash, in their approach.”