Klarna confirmed on Wednesday that it is pursuing a full banking licence in Europe, a move that would let the Swedish fintech offer deposit accounts, savings products and traditional lending to its 150 million customers. The company already holds a banking permit in Sweden but is seeking broader authorisation to operate across the European Union.

Klarna, best known for its buy now, pay later products, has been diversifying its business ahead of and following its US public listing. The Stockholm-based group, led by chief executive Sebastian Siemiatkowski, has pushed to reduce reliance on merchant fees from instalment lending.

Becoming a fully licensed bank would place Klarna in direct competition with digital challengers such as Revolut and Monzo, as well as incumbent lenders. Analysts at Citi and Morgan Stanley have noted that deposit funding could lower Klarna's cost of capital and stabilise revenue, though it would also subject the firm to stricter capital and liquidity requirements.

Regulators including Sweden's Finansinspektionen and the European Central Bank would need to sign off on any expanded authorisation, a process that typically takes months. A Klarna spokesperson said the company intended to give customers a wider range of everyday financial services while maintaining its consumer-focused approach.

The pivot reflects a broader trend in which fintech firms once defined by narrow niches now seek the regulatory status and balance-sheet strength of traditional banks, betting that customer trust and cheaper funding will outweigh the compliance burden.