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Klarna, the global digital bank and flexible payments provider, today reported its financial results for the second quarter of 2025. Klarna delivered its fifth consecutive quarter of operational profitability and reached major milestones, including $823m in revenue, 111 million active Klarna consumers, 790,000 merchant partners, and $1 million in revenue per employee, nearly triple the figure from two years ago ($369,000). Sebastian Siemiatkowski, CEO and co-founder, said: “As we celebrate 20 years of Klarna, we’re hitting milestones I once only dreamt of; $823m in revenue, 111 million active Klarna consumers, 790,000 merchants, and $1 million in revenue per employee. The Klarna Card is becoming a preferred payment method across our most mature European markets, and we’re now rolling out an enhanced version in the U.S. Strategic integrations with leading PSPs and our partnerships with some of the world’s largest merchants are expanding Klarna’s reach and accelerating our growth. At the same time, our growing consumer base remains healthy, with more customers paying on time than ever before.” Q2 2025 marked Klarna’s fifth consecutive quarter of operational profitability, with adjusted operating income reaching $29 million, up more than $26 million from the previous quarter. Group GMV rose 19% year over year in the quarter and 24% year over year in June, while revenue growth accelerated to 20% like-for-like, up from 15% in Q1. In the U.S., Klarna saw particularly strong performance, with revenue increasing by 38% YoY. Klarna’s momentum is fueled by its expanding merchant ecosystem and growing relevance in everyday financial lives. In the past 12 months, 202,000 new merchant partners have joined Klarna’s network, including strategic integrations through Stripe, now ramping up globally. As was announced earlier this year, Klarna is now powering OnePay Later at Walmart, which went live this quarter to bring Fair Financing options to millions of consumers. OnePay Later Powered by Klarna is set to become the exclusive provider of term financing at Walmart once the rollout is complete. Meanwhile, eBay expanded its partnership with Klarna to millions of U.S. consumers following multiple successful European rollouts—with the launch already outperforming early expectations, according to eBay. With additional launches expected in the coming quarters with Worldpay, Nexi, and JPMorgan Payments—whose combined networks process over $5 trillion annually—Klarna is well-positioned for further long-term growth. A record number of transactions were paid on time or early in Q2, and overall provision for credit losses remain low (0.56% of GMV), as realized losses fell from 0.48% in Q2 2024 to 0.45% in Q2 2025. Klarna’s delinquency rate also dropped in the period, highlighting the healthy, stable behavior of Klarna’s global consumer base. Pay Later (BNPL): Klarna’s global delinquency rate on BNPL loans dropped to 0.89% in Q2 2025, a 14 basis point improvement from 1.03% in Q2 2024—underscoring the continued strength and responsible usage of short-term credit by its customers. Fair Financing: Delinquencies on Klarna’s fixed-term product fell slightly to 2.23% in Q2 2025, down from 2.34% a year prior. This product, used for higher-value purchases over 6–12 months, continues to show stable performance as Klarna scales it across additional categories like homeware and appliances. In Q2, Klarna launched the U.S. pilot of the enhanced Klarna Card, bringing Klarna’s flexible functionality into consumers’ pockets, without the revolving debt and interest fees of traditional credit cards. Accepted at over 150 million merchants worldwide, the card is already becoming a primary payment method for consumers across Klarna’s mature European markets, both online and in-store. The Klarna Card also builds naturally on the foundation laid by our Balance accounts launched last year and our growing suite of savings products in Europe.

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As it pushes to expand installment lending inside brick-and-mortar stores, Splitit is turning to digital wallets, hoping to pick up scale with a combination of contactless payments and the vast reach of the big technology companies that operate the apps. The company’s first move is to link to Samsung Pay, which is adding a feature that enables consumers to pay over time using existing credit at the point of sale. Splitit did not release the exact number of merchants that would be added, saying it would be “most stores” where Samsung Pay is available. Splitit, which told American Banker it plans to announce another large mobile wallet integration in the coming months, is seeking to reach more merchants as more payment technology companies and banks join the fintechs that have dominated the BNPL industry. “An NFC wallet gives us access to millions of consumers and [thousands] of merchants that have NFC terminals,” Splitit CEO Nandan Sheth told American Banker.

Sheth was referring to near-field communication, the technology that enables mobile phones to “talk to” point of sale terminals that accept contactless payments in stores. Eleven years after the launch of Apple Pay, which uses NFC as a core technology, there are more than 230 million NFC terminals globally, according to Research and Markets, adding that 99% of POS terminals shipped in North America and Europe are NFC enabled, with near saturation in Latin America and Asia. Samsung Pay is on pace to process more than 1.6 billion payments globally, and has 35 million active users in the U.S., according to Coin Law, which reports Samsung Pay’s compound annual transaction growth rate in the U.S. is 9%. Apple Pay has 69 million users in the U.S. and 659 million globally, according to Coin Law, which adds Google Pay has 165 million U.S. and 820 million global users. NFC payments are 85% of Samsung Pay transactions, and the app is available in 31 countries. “We’re starting in the U.S. but Samsung Pay is globally large and will move into the large Samsung Wallet markets, primarily in Europe and Asia,” Sheth said. Samsung did not return a request for comment. Like Apple and Google, Samsung has added financial products to its mobile technology over time, giving Samsung incentive to add features that enable flexible payments. For example, Samsung Pay in late July became a payment method and deposit option for trading user accounts in the Coinbase app, boosting Samsung’s reach into digital assets. As Samsung Pay and other mobile wallets grow, Splitit can boost usage by creating payment flexibility, Sheth said. “We can engage those consumers inside the wallet and drive foot traffic for merchants that accept NFC terminals,” Sheth said, adding Splitit would aggressively market to consumers ahead of the holidays in December. 

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State Street is pushing deeper into digital assets by joining JPMorgan’s blockchain-based tokenized asset platform Digital Debt Service as the first third-party custodian. The first transaction State Street anchored was a $100 million tokenized commercial paper issuance by the Oversea-Chinese Banking Corporation (OCBC), a Singapore-based banking group.  State Street Investment Management, the bank’s asset management arm, purchased the debt. J.P. Morgan Securities acted as placement agent. The tokenized asset market could grow could balloon in the next few years, though projections vary from McKinsey’s $2 trillion by 2030 to Ripple and BCG’s almost $19 trillion by 2033. By joining JPMorgan’s blockchain platform, State Street can now offer clients custody of tokenized debt securities without changing its traditional servicing model. In this particular case, State Street manages client holdings in a digital wallet directly connected to JPMorgan’s system, eliminating manual steps in settlement and recordkeeping. The infrastructure supports delivery-versus-payment settlement, with the option for same-day (T+0) settlement, and automates corporate actions such as interest payments and redemptions through smart contracts.

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Steve Steinour, chairman, president, and CEO said, “Our second quarter results reflect the ongoing successful execution of our organic growth strategy. We are acquiring new customers, deepening relationships, and expanding both net interest income and fee-based revenue through the strength of our product suite and capabilities. Our sustained growth reflects focused execution across both our core businesses and new growth initiatives. We are leveraging our scale as we further expand our well-diversified loan portfolio and continue to deepen client relationships. We have seen both loans and deposits growth of approximately $10 billion over the last year. Our commercial specialty banking teams are delivering solid results, as we broaden capabilities and extend our national reach. The Huntington brand is gaining traction and attracting clients in our newer markets—North and South Carolina and Texas, where the combination with Veritex further supports our long-term growth ambitions. Credit continues to perform well, demonstrated by improved net-charge offs and stable levels of criticized and non-performing assets. This is evidence of our disciplined credit risk management and client selection. We remain confident in our ability to execute our strategy and sustain strong growth, while maintaining our disciplined approach to risk management. We have never been better positioned.”

• Executing Core Strategies: Sustained new customer acquisition momentum with consumer primary bank relationship (PBR); growth of 4% and business PBR of 6% YoY; Drove 11% YoY growth in Key Strategic Fee3 areas; Continuing rollout of full franchise expansion in North and South Carolina; Added new middle market team focused on commercial opportunities in Florida; and Announced acquisition of Veritex in Texas

 

Loans and Leases I Balanced and Diversified Growth: Highlights

• Average loan growth of 1.8% QoQ, or 7.1% annualized
• 40% of 20 growth from new initiatives
• Organic expansion in Texas and North and South Carolina
• Growth in Specialty and Commercial verticals including
• Financial Institutions Group and Funds Finance
• Core growth driven by Regional Banking and Middle Market
• Auto continued to benefit from sustained new
• origination levels
• New CRE originations improving and run-off decelerating

 

Strategic Fee Revenue Focus Areas I Payments

Drivers:

• Payment revenue growth of +7% YoY led by +18% growth in commercial payments
• Merchant services revenue growth of +96% YoY and new account growth of +52% YoY benefitted from new operating model
• TM revenue +10% YoY revenue growth

Highlights:

• 2nd highest growth rate in commercial card spend in FY241
• Debit card spend growth exceeded industry median by
• 60% in FY242
• Strong customer acquisition and enhanced relationships
• supported by Best Bank- Trust award

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Entry-Level Financial Analyst: Gen AI is automating the analyst bullpen process, enabling AI models to generate discounted cash flow models and draft investment memos before human input. This shift towards “hybrid jobs” involves human expertise directing and verifying AI-driven analysis, with future analysts tasked with querying AI, validating outputs, and adding strategic insight, a shift from data-gatherer to AI-interrogator. The Customer Service Representative: The call center industry is undergoing a significant transformation with AI-powered agents, transforming roles like customer support. Swedish fintech Klarna now employs most of its workforce with Gen AI daily, while remaining human agents become escalation specialists, handling sensitive cases that require genuine empathy, a skill AI has yet to master. The Compliance Analyst: The financial industry faces regulations like AML and KYC, and generating AI can effectively detect patterns and flag suspicious activity. This shift shifts the human from a data-sifter to an AI auditor, emphasizing the importance of human oversight in AI-augmented risk management systems. Human professionals will now design, train, and audit these AI systems. The Data Entry Clerk: The data entry clerk role in fintech is becoming increasingly vulnerable due to advanced AI and optical character recognition (OCR), which can now accurately input data in real time, reducing the time spent on this role. This shift is a clear case of technological replacement, freeing up human capital for critical thinking tasks. The Content Marketer: Fintechs rely on consistent content to engage clients, and generative AI can produce high-quality, SEO-optimized articles, social media copy, and market updates. This shift pushes human marketers up the value chain, forcing them to become strategists managing AI as a tool. Their future lies in crafting creative campaigns and brand voice that AI will amplify.

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With new Aug. 1 tariffs on imported goods looming, many consumers are taking actions to avoid overspending in the future. Shoppers are tightening their spending this summer in a number of ways. according to a new consumer survey from RetailMeNot. Dining out and takeout (50%), clothing and accessories (49%) and electronics (45%) are the three most popular categories for cutbacks, followed by travel (42%), groceries (29%) and home improvement (28%). Only 9% of consumers said they weren’t planning to make any cutbacks at all, meaning that over 90% are adjusting their personal finances in some way. In other findings, more than half (55%) of shoppers said they are feeling increased pressure on their household budgets. Over 70% believe tariffs will make their financial situation worse. Forty percent expect their household finances to be “slightly worse” over the next six months due to tariffs, while 31% expect it to be “much worse.” With potential price hikes looming, a majority (60%) of consumers surveyed say they’re starting holiday gift shopping early this year. Thirty-seven percent are already planning for back-to-school, 30% are thinking ahead to Thanksgiving, and 27% are prepping for Halloween. RetailMeNot says that shoppers are acting early because they don’t want to be caught off guard later by increased prices.

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Rocket Companies, has returned to profitability despite a challenging second quarter for the mortgage industry, marked by economic uncertainties in the U.S. The company is now focusing on integrating the recently acquired real estate brokerage firm Redfin, which has already shown early benefits. In the second quarter, Rocket reported a GAAP net income of $34 million, a decrease from its $178 million profit in the same period of 2024, but a significant improvement from the $212 million loss in the previous quarter. Adjusted net income was $75 million, according to filings with the Securities and Exchange Commission.  “We mentioned a delayed spring homebuying season, and that’s exactly what played out,” Varun Krishna, CEO of Rocket Companies, told analysts on Thursday. “April was pretty abnormal; there was a lot of volatility. You had tariffs, rates dipping and climbing, consumer sentiment dropping. In general, affordability was a little bit challenged.”  Rocket’s total revenue for the quarter was $1.36 billion, up from $1.3 billion in the same period last year, while expenses increased from $1.1 billion to $1.3 billion. Mortgage production rose to $29 billion from April to June, compared to $24.6 billion in the same period last year and $21.5 billion in the first quarter of 2025. The direct-to-consumer channel accounted for $14.1 billion, surpassing the $13.4 billion Rocket produced in the broker channel. Krishna said Rocket served 100,000 origination clients, with purchase volume increasing month over month from April to June, supported by “affordability programs.” The company also experienced “strong growth” in refinance volume, he said, while home equity loan originations nearly doubled year over year, setting new records for units and volume. On the artificial intelligence front, there was a nearly 20% increase in daily follow-ups with refinance clients. More than 80% of clients opted to continue their applications via chat, with those starting their journey in AI chat converting at rates that were three times higher on the purchase side of business and 2.5 times higher for refi business compared to those not using chat. Rocket has launched a fully digital refi that can be completed in under 30 minutes, with a goal to reduce it to 10 minutes. Its gain-on-sale margin was 2.80% in Q2 2025, a decrease of 19 basis points compared to the same period last year and a decline of 9 bps from Q1. Executives anticipate margins will remain stable in Q3. Total liquidity in Q2 2025 was $9.1 billion as of June 30. Redfin financials were not included in the Q2 results, but its integration has moved at a “rapid pace,” Krishna said. Rocket has introduced prequalification buttons on every home listing and launched Rocket preferred pricing. Qualified clients who finance with Rocket and work with a Redfin agent have a one-point rate reduction in their first year, up to $6,000. Rocket is adding nearly 150 loan officers from Bay Equity Home Loans, a Redfin subsidiary, enhancing its presence in local markets. The company is also merging the Rocket Homes agent network with the Redfin agent network to achieve greater scale. Since July 1, Rocket has seen more than 65 Redfin clients close on homes. Also, 200,000 people have clicked on the prequalification button, with 23% of Redfin account users becoming contactable leads for Rocket. In addition, 12% of users entering the funnel proceed to start an application, and 7,000 agent referrals have been sent to Rocket. “Clients referred from Rocket to Redfin are 30% more likely than those from other channels to upgrade to verified approval letters, which is the strongest sign that they’re moving toward closing these results,” Krishna said. Regarding Rocket’s acquisition of Mr. Cooper, executives maintain the forecast of closing the deal in the fourth quarter of 2025. The deal will bolster Rocket’s strategy to recapture customers through an expanded servicing portfolio. Rocket’s unpaid principal balance for its servicing portfolio, which includes acquired and subserviced loans, reached $609 billion in the quarter. Brian Brown, Rocket’s chief financial officer, told analysts that servicing portfolio transfers were down 30% in the first half of the year compared to the same period in 2024 across the entire market. But in this “mute market,” he said, Rocket remains “active,” particularly for assets with “high recapture potential.” Rocket streamlined operations by shutting down Rocket Mortgage Canada and winding down the Rocket Visa Signature card program, resulting in $80 million in annualized savings. But total expenses are anticipated to rise by approximately $335 million in the third quarter compared to the second quarter, including $275 million in Redfin-related costs and $90 million in nonrecurring items ($30 million for severance and $60 million for interest expenses from issuing bonds to replace Mr. Cooper’s debt). This is expected to be partially offset by a reduction in standalone expenses. Looking forward, the company expects adjusted revenues between $1.6 billion and $1.75 billion in Q3 2025, which considers a full quarter of consolidated financial results from Redfin.

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Fulfilling the promise of AI requires a step-change in capabilities far exceeding the advancements of the internet era. To achieve this, we as an industry must revisit some of the foundations that drove the previous transformation and innovate collectively to rethink the entire technology stack. We are now witnessing a decisive shift towards specialized hardware — including ASICs, GPUs, and tensor processing units (TPUs) — that deliver orders of magnitude improvements in performance per dollar and per watt compared to general-purpose CPUs. This proliferation of domain-specific compute units, optimized for narrower tasks, will be critical to driving the continued rapid advances in AI. These specialized systems will often require “all-to-all” communication, with terabit-per-second bandwidth and nanosecond latencies that approach local memory speeds. To scale gen AI workloads across vast clusters of specialized accelerators, we are seeing the rise of specialized interconnects, such as ICI for TPUs and NVLink for GPUs. These purpose-built networks prioritize direct memory-to-memory transfers and use dedicated hardware to speed information sharing among processors, effectively bypassing the overhead of traditional, layered networking stacks. This move towards tightly integrated, compute-centric networking will be essential to overcoming communication bottlenecks and scaling the next generation of AI efficiently. Traditional fault tolerance relies on redundancy among loosely connected systems to achieve high uptime. ML computing demands a different approach. First, the sheer scale of computation makes over-provisioning too costly. Second, model training is a tightly synchronized process, where a single failure can cascade to thousands of processors. Finally, advanced ML hardware often pushes to the boundary of current technology, potentially leading to higher failure rates. Instead, the emerging strategy involves frequent checkpointing — saving computation state — coupled with real-time monitoring, rapid allocation of spare resources and quick restarts. The underlying hardware and network design must enable swift failure detection and seamless component replacement to maintain performance. While traditional system design focuses on maximum performance per chip, we must shift to an end-to-end design focused on delivered, at-scale performance per watt. This approach is vital because it considers all system components — compute, network, memory, power delivery, cooling and fault tolerance — working together seamlessly to sustain performance.

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Crypto infrastructure is becoming the backbone of everything from stock trading to social media monetization, with most users unaware of its presence. Traditional finance faces user experience problems due to digital paperwork processes, and crypto infrastructure has solved these problems years ago. MEXC, a crypto exchange with 30 million users, recently launched stock futures for Apple, Tesla, and McDonald’s, while Coinbase is rolling out embedded wallets that allow any app to offer financial services with a few lines of code. Both crypto companies are using crypto rails to deliver experiences that traditional finance will struggle to match. MEXC’s stock futures product eliminates the need for traditional brokerage accounts entirely, while Coinbase is making crypto infrastructure invisible for mainstream adoption. Embedded wallets generate private keys in secure enclaves, allowing developers to have full UX control without touching user funds. The technology is already powering Coinbase’s retail app, which will soon launch DEX functionality using embedded wallet infrastructure. The convergence of social commerce and payments is transforming the way social platforms operate. Coinbase’s Base App allows creators to monetize content using embedded financial rails, transforming the way content is consumed and monetized. This shift in social finance enables creators to capture value directly from their audience, transforming the way content and commerce merge into seamless experiences. Traditional payments companies are also deploying crypto rails for mainstream use cases, such as Remitly’s stablecoin wallet. This wallet bypasses traditional banking infrastructure and allows users to send and receive stablecoins like USDC across 170 countries. The timing is significant, as currency volatility from recent trade policies has made stablecoins more attractive for cross-border transactions. All three companies are building towards seamless financial experiences where the underlying infrastructure becomes invisible to end users. Coinbase’s embedded wallets use the same security and compliance systems that power their exchange, while Remitly leverages the same stablecoin infrastructure that Stripe uses for merchant payments. The regulatory environment is finally catching up, with legislation like the CLARITY and GENIUS Acts providing frameworks for companies to build self-custodial wallet solutions with regulatory certainty. The emerging financial DNA is a completely different operating system for money, where programmable currencies enable new economic models and global settlement happens in seconds.

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Cincinnati, Ohio-based Fifth Third Bancorp opened its first branch in Alabama on Tuesday, checking off another box in its Southeast expansion. The Huntsville location expands the $210 billion-asset bank’s retail footprint to 12 states. It’s the first of 15 Alabama branches — 10 in Huntsville and five in Birmingham — that the bank plans to open over the next three years. The bank already operates in Florida, Georgia, Kentucky, Tennessee, West Virginia and the Carolinas — in addition to its Midwestern markets of Ohio, Illinois, Indiana and Michigan. “[Alabama is] one of the fastest  growing markets in the Southeast,” Shawn Niehuas, head of consumer banking at Fifth Third 0.97(2.35%). told American Banker. Approximately 99 people moved to Alabama per day between 2022 and 2023, according to Consumer Affairs. The new Huntsville branch is one of 200 locations the bank plans to open from late 2024 to 2028 as part of its expansion strategy. Fifth Third anticipates that by the end of 2028, 50% of its branches will be in the Southeast, according to a company press release. “Building density in each of these core communities throughout the Southeast, that has been really our priority,” Niehaus said. “We don’t want to just have an approach where we … sprinkle a few branches here or there and don’t canvas the whole market.” Though Fifth Third is viewed as a potential acquirer in an improving market for regional bank mergers, CEO Timothy Spence said in January that the bank doesn’t need to “reach for M&A” amid strong organic growth. As a new player in Alabama, Fifth Third will have to compete with well-established banks such as Regions Financial and PNC Financial Services Group, as well as other newcomers. JPMorganChase plans to open 24 branches in Alabama by 2030. Earlier this month, analysts at Morningstar DBRS wrote in a research note that Fifth Third’s expansion in the Southeast “creates some execution risk,” given that the region “has attracted competition from well-established banks as well as other regional players.” “However, Fifth Third has an advantage as an early mover with their strategic growth starting in 2018,” the analysts wrote. Niehaus said Fifth Third is not concerned about the competition, citing the bank’s community-based approach and unique offerings. “We don’t just enter a market, we’re going to embed ourselves in the community,” he said. “We really pride ourselves on the relationship banking model and giving the complement of both digital options and building the relationship in person.” Fifth Third hires local employees when it opens new branches, which helps build the bank’s brand in the community, Niehaus said. Fifth Third also offers early pay and free estate planning, which Niehaus said helps separate it from the competition. Another way Fifth Third seeks to differentiate itself is with its ‘next-gen’ banking center model, used for new branches. The tech-forward model encourages customers to move around branches that have an open feel and have conversations where they feel comfortable, Niehaus said. “Many times, I go into … these banking centers and you don’t even see a customer wanting to be in an office,” he said. “You might start at the transaction bar and end in one of those other areas based on the conversation and flexibility the customer wants.” Fifth Third’s expansion in Alabama marks the first time the bank has entered a new state since South Carolina in 2020. Since then, Fifth Third has opened 14 branches in the Palmetto State, with plans of 11 more over the next three years. The bank is anticipating $15 billion to $20 billion of deposit growth over the next seven years, powered by the opening of new branches and other existing branches hitting maturity. Fifth Third is also aiming to gain a top-five market share position in each of the new communities it serves, Niehaus said. Moving forward, Fifth Third plans to deepen its network in the states it already serves, according to Niehaus. As examples, he pointed to communities like Hilton Head, South Carolina, The Villages, Florida, and Wilmington, North Carolina. “We might be in the state, but you see us joining maybe different communities that we haven’t been in before,” Niehaus said. “It’s really filling out and getting to the location share we want and the density in each of these markets.”

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