Commonwealth Bank has invested in Klarna, a Swedish rival to Afterpay, and will bring the European buy now, pay later provider to Australia. The deal accompanies the bank’s continued investment in its digital capabilities.

CommBank invested US$100 million in the fintech’s US$460 million funding round, announced yesterday, which values the company at $5.5 billion. The bank will also become Klarna’s exclusive partner in Australia and New Zealand.

Established in 2005, Klarna has provided financing to 60 million global customers and works with 130,000 merchants. It generated US$627 million in revenue in 2018 and, earlier this year, US rapper Snoop Dogg invested in the business and joined its marketing efforts.

The investment was announced in the bank’s full year financial results, which also highlighted strong growth of digital transactions and log ins.

Seven million of CBA’s retail bank customers are now banking with the group through its digital channels, up 500,000 from a year ago. 5.6 million are now monthly customers on the CommBank app and the bank handles 7.4 million digital log ons daily.

Since launching online banking service Netbank in 1997, 63 per cent of the bank’s transactions by value are now processed through digital channels. Digital transactions have been steadily rising since they went through the 50 per cent mark in 2015 but have shown a significant jump in the past 12 months to 30 June 2019, breaking through the 60 per cent level, the bank said.

Commbank digital transactions
Source: CBA

The bank recently relaunched its app, which was named Australia’s best by Forrester, featuring a new home screen to give customers a more personalised interface.

CommBank CEO Matt Comyn has stated the bank plans to invest $5 billion dollars over the next five years to remain a leader in digital banking.

“To further strengthen our leadership position in digital, we have continued to invest to bring together the best technology with the best service to deliver exceptional customer experiences,” Comyn said.

The bank noted it also began publishing product data via API on July 1st, as part of the first stage of Australia’s open banking regime. Consumers will be able to share their data with different products progressively enabled from February 2020.

It also recently launched the CommSec Pocket App aimed at small investors who can buy a package of shares for as little as $50 with very low broker fees, and the introduction of BizExpress, which delivers simpler, faster business loans with same day lending decisions for unsecured loans up to $250,000 and secured loans up to $1 million.

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