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Brands like Nike, Coca-Cola, Klarna, and Cadbury have already embraced AI in various forms. Klarna鈥檚 use of AI has saved $10 million annually by cutting down costs related to external agencies and increasing efficiency in content creation. In another example, Coca-Cola's "Create Real Magic" campaign used AI tools to allow consumers to personalize ads, driving strong user engagement.

In an extreme case that could foreshadow changes for the ad industry, payments firm Klarna laid off thousands of employees and curbed ad costs by leveraging AI.

Klarna uses AI to streamline customer service and reduce costs. By utilizing content structured in Contentful and AI-powered assistants, Klarna AI fielded 2.3 million customer service chats in its first month, Phillips said. This shift will save Klarna an estimated $40 million this year.

Klarna, for example, charges a late fee if a payment is more than 10 days late. Extending this time frame could eat into Klarna鈥檚 revenues. Unanswered question: The CFPB didn鈥檛 directly address Klarna鈥檚 concerns about dispute periods. Providers just have two billing cycles to handle a dispute.

Zooming out: PayPal Ads is also part of a larger trend in financial services, with players like Klarna, Revolut, and Chase launching financial media networks (FMNs). FIs see advertising as a way to diversify revenue streams as traditional profit margins come under pressure. This launch is also part of PayPal鈥檚 鈥渢ransition year,鈥� focused on driving profitable growth.

PayPal, Revolut, and Klarna now offer marketplaces of goods or services based around payment solutions. Social apps boost shopping functions. Social commerce is a decade old, but better integration with payments and fulfillment services led to a healthy 26.3% growth rate in 2023. Services apps join the fun.

Klarna. PYMNTS.com. SoFi. The Motley Fool.

I think networks like Klarna have an advantage here because they've been building out kind of their own shopping experience within their app for a few years now. And so they've already got this kind of ecosystem where customers are going, they're looking for things.

Just last week, we wrote about how Klarna is leaning into affiliate marketing revenues to boost profits. And it worked: Klarna achieved profitability in May鈥攊ts first month of profit since August 2020, per its H1 2023 results. Like Klarna, Affirm is also hoping to diversify its revenues, but it鈥檚 just taking a different strategy by banking on subscription revenues and the Affirm Card. Will it work?

Example: Klarna. 鈥淗istorically, we鈥檝e connected merchants and consumers through our payments and ecommerce services,鈥� said David Sandstrom, chief marketing officer at the payments company. 鈥淏ut we have so much data that we can now connect them through advertising as well.鈥�. Klarna will have 42.8 million US users this year, nearly a fifth (19.3%) of all digital buyers, per our forecast.

Affirm recently partnered with an eyewear retailer, for example, and Klarna partnered with a B2B car-rental company. Greater acceptance. BNPL debit cards and partnerships like Affirm鈥檚 with Walmart have made it easier to use BNPL in stores. What鈥檚 next? All of these drivers will boost BNPL鈥檚 growth throughout 2024.

Affirm notched three sequential quarters of profitability while Sezzle reported five, and Klarna posted a profit for the first time since 2019. Much of that profit didn鈥檛 come directly from BNPL transactions. For multiple quarters, Klarna cited merchant services鈥攚hich includes things like advertising鈥攁s its fastest-growing revenue stream.

Payments company Klarna has resolved to streamline its operations with AI, stating it wants to cut an additional 2,000 jobs.

But Splitit is not alone in targeting the in-store BNPL market: Klarna and Afterpay also have offerings. That could make it harder for the firm to stand out as industry leaders also turn from ecommerce to brick-and-mortar shopping. This article originally appeared in Insider Intelligence's Payments Innovation Briefing鈥攁 daily recap of top stories reshaping the payments industry.

Klarna. LocalCircles. Ninja Van. NTTCom Research. Seoul Metropolitan Government. The Korea Bizwire.

Klarna also just achieved its first quarterly profit since 2019 in its Q3 2023 earnings (ending September 30). This positions both companies for strong financial health moving forward. In the future, Affirm plans to reinvest some of its profits into growth initiatives. What鈥檚 next? Affirm hopes its growth will continue during the holiday season.

Fintechs like Klarna and Afterpay and incumbents entering the market have made it harder for BNPL providers to stand out. But Affirm is still increasing its volume and can benefit from market growth: By 2026, 38.9% of US internet users will use a BNPL solution, up from 30.7% in 2022, per Insider Intelligence forecasts. What next?

Klarna: The buy now, pay later company expanded its Ads Manager to the UK and Sweden, but Klarna has been fairly quiet on the retail media front. It risks being overshadowed by other payments companies entering the RMN game. This was originally featured in the 蘑菇AV Daily newsletter. For more marketing insights, statistics, and trends, subscribe here.

Yes, but: While Salesforce and Klarna are among the many companies betting on AI-powered customer service, consumers are less enthusiastic. A survey of Morgan Stanley interns found that the overwhelming majority鈥�93%鈥攑refer to speak to a human regarding a customer service query, per Business Insider. Three-quarters said chatbots failed to solve their issues at least half of the time.

Providers like Afterpay and Klarna ramped up their shopping features ahead of the holidays to capitalize on this spend, and so far, these efforts have paid off. BNPL transactions through Afterpay increased 19% YoY this weekend, per a press release. A lot of this activity took place directly in the Afterpay app: usage was up 16% from last year.

Klarna is pushing further into in-store BNPL services, giving advertisers a chance to reach consumers in-store as well as online. This was originally featured in the Retail Daily newsletter. For more retail insights, statistics, and trends, subscribe here.

Blackhawk also partnered with Klarna to lean into Gen Z鈥檚 love of BNPL. 4. Digital wallets and rewards points will also be key payment methods for holiday purchases. Almost 30% of consumers plan to use PayPal for holiday shopping, and about 15% plan to use Apple Pay, per i2c and PYMNTS.

While businesses like Best Buy and Klarna see AI-enabled chatbots as an opportunity to save money on labor without sacrificing service, consumers feel differently.

To appeal to younger consumers, BNPL providers like Klarna are adding features like shoppable videos and an AI-powered shopping lens, which allows shoppers to take a picture of items in their surroundings and instantly find out where to buy them in the Klarna app. 4. AI plays a (small) role in holiday shopping. The stat: 44% of consumers will use AI in their holiday planning, per 84.51掳.

Affirm鈥檚 Debit+ card has experimented with rewards points, and Klarna also has a rewards club. But they don鈥檛 stack up to credit card programs, where 3% cash back is fast becoming de rigueur. What鈥檚 the answer? BNPL firms can鈥檛 stand up to credit card reward schemes on their own. Instead, they鈥檙e going to need to tap their extensive merchant networks and partner on BNPL-exclusive rewards and offers.