September 16, 2020
Klarna has scored a place in the UK’s top 10 financial services brands – here’s why
Klarna has expanded rapidly since it first launched in 2005 in Sweden
Klarna has made a big splash in the Financial Services industry, having grown strong brand affinity amongst the younger generations, and has emerged as a clear winner during the pandemic.
Swedish bank Klarna sits in 7th place in our new Top 100 Most Loved Financial Services Brands report. As a niche brand that has only existed for 5 years in the UK, Klarna has rapidly built strong brand affinity, placing it as a firm competitor against the other well-known, established brands that dominate the Top 100.
Klarna has expanded rapidly since it first launched in 2005 in Sweden, and with the UK following in 2015, it now spans 17 countries worldwide. Klarna provides an alternative way to pay during online shopping, offering customers access to credit within a few clicks, removing the need to apply for credit through traditional means. Customers can use Klarna to ‘buy now and pay later’, split their purchase into manageable payment plans, or defer upcoming payments via the Klarna app.
Klarna’s offering is specifically tailored to younger generations, particularly young women, so it’s not without accident that ‘Brand Love’ nearly doubles amongst women aged 16-24 when compared to the overall population.
Why is Klarna so popular amongst Gen Z? Klarna’s ‘millennial pink’ drenched marketing is specifically targeted towards younger women, and their participating retailers (such as ASOS and Topshop) also skew heavily towards a younger female audience. Evidently, their targeted approach has worked, as we see BrandVue awareness of Klarna jump from 37% amongst the overall population to 60% amongst 16-24-year olds, and 64% amongst females aged 16-24.
Klarna has successfully tapped into the younger generations’ unique methods of buying online. A generation heavily influenced by social media trends such as ‘hauls’ – where influencers bulk order items before showing each purchase to their followers. Klarna has recognized Gen Z’s affinity with fast fashion and fluency in using technology, and has streamlined Gen Z’s distinctive path to purchase – where for example customers can bulk order online using Klarna, return as much as they want, and no money need leave their bank account or credit card.
As consumer shopping habits have been forced online, Klarna has emerged as one of the few ‘winners’ during COVID-19. Awareness amongst all age groups has increased +10%, and brand consideration is up +5% during the pandemic – a huge increase within a broadly static category.
Klarna has even managed to innovate during the pandemic, now offering a seamless customer shopping experience and personalised recommendations within their app, which has been reflected in an +7% overall increase since June for the image statement ‘innovative’.
The most significant increase, however, is for being perceived as ‘helpful’. This is the biggest driver of ‘Brand Love’ and Klarna has seen this attribute increase more than 10% since January– a trend not seen in any other credit or payment platform brands within the same timeframe –which is certainly a key contributor to such a high ‘Brand Love’ score.
As brands like Klarna bring attention to the many benefits of paying in instalments, some may have concerns that younger age groups may not be aware of the consequences should they miss a payment or have the necessary funds to cover purchases in the first place. But despite that, Klarna provides a perfect example of how a financial services brand can successfully tap into consumer needs and build an exciting, innovative brand that has adapted to changing consumer shopping habits.
To find out more or download our Top 100 Most Loved Financial Services Brands report, click here.
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