Article from AFR
Klarna sheds Australian leadership as Afterpay bitesJames Eyers, Jonathan Shapiro and Michael RoddanMay 28, 2021 – 3.15pmSaveShareKlarna, the Swedish buy now, pay later player part-owned by Commonwealth Bank, has parted ways with Australian chief executive Fran Ereira and three other senior team members.Klarna Australia managing director Fran Ereira has left Afterpay’s buy now, pay later competitor. Simon SchluterKlarna, considered to be Afterpay’s main global rival, has struggled to land a glove on Afterpay or Zip in the Australian market.The move to overhaul the local management team has been driven by its head office in Sweden, which is thought to be unhappy with the underperformance in Australia given that Klarna is growing strongly in most other markets, including the United States.The company this week raised $US1 billion ($1.3 billion) from investors, including Japanese conglomerate Softbank, ahead of an eagerly awaited initial public offering in the United States.Sources said Mrs Ereira, Klarna’s Australian head of finance Greg Twybel, local chief marketing officer Andrea Darling and local head of corporate affairs Angus Trigg were all told of the decision on Thursday evening.AdvertisementOther members of Klarna’s senior executive team left recently, including former head of commercial sales Hugh Griffith, who joined Afterpay in April as director of new verticals; and Dan Lavis, Klarna’s former commercial director overseeing merchant relationships, who left in March and has joined Google.Klarna’s chief expansion officer, Camilla Giesecke, a member of the company’s executive committee, oversaw the departures this week. She may be dispatched to Australia, which is considered strategically important given it is the backyard of Afterpay and Zip, sources said.Klarna’s local representatives could not be reached on Friday. Klarna’s global representatives did not immediately respond to a request for comment.In Australia, Klarna has integrated with only about 700 merchants compared to Afterpay’s more than 35,000, but its product can be used at any merchant. Klarna, which copied Afterpay’s ‘pay in four’ instalment model to turbocharge its growth in the US, has been rapidly winning customers there. It has about 90 million customers globally and dominates in northern Europe.But in Australia it found conditions much tougher, despite its relationship with Commonwealth Bank, which owns 5 per cent of the company.Klarna has integrated with only about 700 merchants in Australia, compared to Afterpay’s more than 35,000, although its product can be used at any merchant.Klarna faced not only Afterpay in Australia but also Zip, Humm, Openpay, LatitudePay and other options, meaning its offering failed to resonate.“Sweden has a take no prisoners, punchy culture,” said a source familiar with the operations who was aware of the departures. Asked about the local performance, the person said: “There were too many things going on at the same time, which meant we were doing nothing well.”RELATEDLook out big tech – CBA wants to be a platformKlarna arrived in Australia in January last year after partnering with CBA, which made its services available through its banking application.CommBank invested $US100 million on the Swedish short-term lender back in August 2019, and put in a further $US200 million early last year and has participated in further funding rounds.When the investment was announced, the expectation was for CBA to use its scale to help Klarna gain both retail and merchant customers.The app has been downloaded 850,000 times, but it is unclear how many of these are repeat users. Klarna has not reported Australian sales volumes. CBA has not disclosed how many of its customers have integrated Klarna through the CommBank app.In a surprise move, the bank said in March it would launch its own buy now, pay later offering. That prompted questions about the strength of the relationship and Klarna’s traction.Eventful 24 hoursOn Thursday, during a technology briefing, CBA chief executive Matt Comyn suggested Klarna remained an important part of the bank’s strategy to push deeper into e-commerce and retailing.“Klarna remains a very important strategic partner for CBA in Australia and ASB in New Zealand over the long term,” Mr Comyn said. Klarna launched in New Zealand in April.“But we also wanted a direct offering in this area taking advantage of the preference of customers to pay instalments,” he added.The management upheaval in Australia comes in an eventful 24 hours for the buy now, pay later rival of Afterpay, which was reported to have raised an additional $US1 billion of funding.The last raising valued the company at up to $US50 billion. Softbank, the Japanese conglomerate with a large appetite for tech investments, was a participant in the latest funding round, according to Reuters.RELATEDDoubts about CBA’s $2b Klarna bonanzaKlarna was also hit by apparent data breaches that appear to have been limited to its European operations. The company’s local representatives were not available for comment when asked about the breaches as their email and mobile phones were disabled.Klarna was founded in 2005 in Sweden and is one of the largest players in the buy now, pay later or instalments financing sector. The company says it has partnerships with 250,000 merchants across North America, the UK, Europe and Australia.The company is gearing up for an initial public offering and announced that former Federal Reserve vice-chairman Roger Ferguson had joined the board.James Eyers writes on banking, fintech and technology
Expand
