Service Design - Finance
Financing with Klarity: A case study reimagining ethics of Klarna
Project type
Icebreaker project
Year
2023
Team
Danee, Jill, Parul, Ricky, Tian, Yiran
The brief
In our first semester at the Royal College of Art, our team of five was given a design brief to do a case study on Klarna, a buy-now-pay-later one-stop service. We were then expected to form a point of view on their current service and propose a new strategy addressing issues identified to enhance their current service offering.
What Value does Klarna currently bring to its users?
Why are so many consumers and merchants willing to choose Klarna over other products? From a consumer’s perspective, they choose Klarna for flexibility in finance. What's more, Soft credit checks , quick approval and free installations provide more opportunities to diverse consumers.
How does value exchange currently happen?
Klarna pays retailers for orders first, then the customer pays back money to Klarna. Of course, they can be flexible about that. In addition, merchants have to pay fees for Klarna’s platform to get more traffic. Klarna also earns money from late fees and interests from consumers.
Who users Klarna as consumers?
Like the chart suggests, we found that 70% of Klarna’s consumer side users are Gen-z and Millennials. They often resort to Klarna as their primary mode of payment, allowing them to pay in installments of three for every purchase they make.
How are they using Klarna?
Problem Statement
Klarna provides a comprehensive system to its users that makes shopping and transactions easy but has gaps in assuming accountability for its services. The smoke screen of BNPL encourages users to spend impulsively. This further affects ‘newly financially independent’ users who do not have an awareness of the effects of defaulting payments. Klarna also blindspots its users with lack of clarity in information essential to their expenditures.
Let’s look at Sharon’s journey. An excited user is now left disempowered following poor financial choices, unaware of the impact on her credit score.
What are the main challenges in the journey?
Through our user journey exercise, we were able to plot pain points in the overall interaction with Klarna. From there, we grouped them into recurring themes of challenges including fundamental structural flaws as seen in the flow chart.
How might we leverage Klarna’s holistic service to empower customers to make informed and responsible financial choices, promoting the wise use of Klarna and highlighting alternative options to support financial resilience?
What if we approach the themes of problems we identified on multiple levels? Can we address the lack of accountability by being thoughtfully personal? Can we perhaps address blind spotting by creating learning avenues and being accessible?
Can we address issues that emerge on a business level with a responsive and strategically generative solution?
From smooooth shopping to smart financing.
Our strategy, in a nutshell, is "From smoooth shopping to smart financing". We envision our strategy to empower users and improve their financial literacy to help them make informed/ financial decisions - helping them learn about making smart financial decisions along their way. Not just personalised service for shopping, but personal assistance to banking and financing
The proposed strategy.
We thus find the need for Klarity.
Empowerment through financial literacy
Klarity is an AI-powered financial assistant that is thoughtfully personal, widely accessible and strategically generative. By collecting data, analysing it and observing your shopping decisions, Klarity helps you set goals, provides advice and generates feedback for your financing.
To avoid overseeing spendings, lose track of pending bills and splurge especially with BNPL, Klarity empowers you with with real-time budgeting solutions and suggestions. It helps in gaining a holistic understanding of your spends and tracking your expenditure to help you make financial choices that are rewarding and kind on your pocket.
What impact does Klarity have?
Building shared resilience
