Barclays chief executive Jes Staley declares bank will take on ‘buy now, pay later’ loans giant Klarna
Barclays chief executive Jes Staley has declared the bank will take on ‘buy now, pay later’ loans giant Klarna.
He said Barclays will invest heavily in technology to challenge the Swedish fintech firm, which is valued at $45.6billion (£33.6billion).
‘Buy now, pay later’ firms such as Klarna and ClearPay have exploded in popularity in recent years, offering customers credit to pay for online shopping.
Battle: Barclays will invest heavily in technology to challenge the Swedish fintech firm Klarna
Customers can repay in instalments – just as if they were borrowing using a credit card – but the deals are unregulated and no credit checks are required.
Speaking at the Wall Street Journal’s CEO Council, Staley urged regulators to crack down on Klarna, ClearPay and other firms that offer online shopping loans without checking whether customers can afford the items they are buying.
Staley said: ‘We need to accelerate the digitalisation of our offerings to compete with people like Klarna and Stripe.
‘I also do believe that the regulatory parameter is going to need to widen. To give you an example, in the UK, we have to show our regulators and ourselves that when we extend credit to a consumer that that consumer can afford it.
‘Fintech companies don’t have that obligation. As they get bigger, the affordability issue – them extending credit to UK consumers – will become an issue for the regulators… and I think that’ll change the playing field.’
Staley has turbocharged plans to offer more ‘buy now, pay later’ products by appointing Antony Stephen – previously head of payments for Amazon in Europe – as chief executive of Barclays’ partner finance business. Stephen has been charged with lining up lucrative deals with Britain’s largest retailers to offer ‘buy now, pay later’ loans.
Klarna has sparked anger for saddling consumers with debt. The financial watchdog has carried out a review of the sector and market sources expect Klarna will face tough new rules by the end of 2022.
Barclays already has a number of high-profile finance deals with tech giants. It has provided interest-free loans for iPhone purchases through Apple since 2019.
Experts said most banks will wait until new rules are in place before ploughing into the fast-growing sector.
Gary Greenwood, banking analyst at Shore Capital, said: ‘It is ridiculous what the likes of Klarna have been getting away with. But there should be a level playing field when the clampdown happens.’