SaaS is shifting but Klarna is distracting!

👉 For quite sometime, multiple conversations are running with narrative like "SaaS is dead" | "SaaS is losing its value" - these conversations are running as current AI support has enabled enterprises to build certain modules internally thus making some think "SaaS as redundant"

👉 While in my next post, I will cover the changing "landscape of SaaS" - I want to callout how Klarna's current move is distraction

👉 Klarna is a buy-now, pay-later provider (credit underwriting makes you king here; to simplify credit underwriting is basically who should be lent for how much and till when) and have recently announced snapping ties with Salesforce and Workday and thus will now make the same modules in-house

While inhouse is not a concern, dwindling focus is!! (a key metric of their business is consumer credit losses which is based on their ability to underwrite)

👉 Their recent annual report mentioned 39% YoY increase in such losses and have justified it by quoting the loss as compared to GMV (0.5% of GMV)

👉 Problem is while it is only 0.5% of GMV, taking it as a % of GMV is vanity metric as the absolute metric of consumer credit loss / expense item makes up 33% of their service costs

👉 And not to forget they are still bleeding!

POV : Would it not have been better to partner with provider that helps them better underwrite such credit - instead they are putting stress on engineering teams to make market leader solutions inhouse