​​​​​​​

After a brief foray into politics, Oscar Hållén decided to get some real-life experience in the legal world. He speaks to In-House Perspective about his role at one of the world’s largest private Fintechs, the merits of regulation and why all general counsel should take time to wake up and smell the Fika.

When Oscar Hållén describes his career path to working in-house as ‘irregular’, he isn’t wrong. After moving to Stockholm from rural Sweden, a stint as a political adviser and speechwriter to the Swedish Prime Minister saw him travel the world before he decided he should really ‘get a real job’. After finishing his law studies, he was seriously considering training as a judge, but several professors inspired him to pursue a career in banking and finance.

For some, this would seem a rather dry subject compared to international politics, but Hållén says studying this area really opened his eyes. ‘It’s something that you don’t really see when you live your normal life,’ he says. ‘You don’t stumble upon securities laws in the sense that you do when you go into law school and study this area. On the back of the financial crisis, there were a lot of discussions on how credit derivatives and other instruments work. I think Warren Buffett described them in the financial industry as “weapons of mass destruction”. I was very intrigued by how they worked. I realised that that’s what I wanted to work with as well, so that led me into private practice for the banking and finance group.’

After starting out in private practice, Hållén’s international background and curiosity led him in-house to Klarna Bank. Founded in Stockholm in 2005, Klarna now ranks alongside Spotify, Mojang, King and iZettle as one of Sweden’s leading ‘unicorn’ (referring to a privately-held start-up valued at over $1bn) tech start-ups. It’s a bank, an online payments platform and is perhaps best known nowadays for its buy-now, pay-later (BNPL) service that graces the webpages of many high-street retailers, allowing consumers an interest-free way to spread payments across a longer period that rivals the traditional credit card.  

Hållén became Klarna’s third general counsel in February 2018. When he joined, the legal team comprised around 20 lawyers, mostly based out of Stockholm, Germany and the US. It was a time of great change as Klarna altered its entire operating model. This had a huge impact on the legal team, which had previously been very centralised. ‘We changed to a distributed model, where we divided the whole company into teams of between four and eight people,’ says Hållén.

Nowadays he estimates that the 4,000-strong organisation has around 400 teams, which are grouped into what he describes as ‘domains’. Each domain has a team of experts focused on a particular area, including at least one lawyer.

Today, the legal headcount has grown to 70. As Hållén attests, there’s a legal element to almost all Klarna’s activities: ‘I would say that we are involved in most aspects of everything, from product development to data privacy, regulatory considerations, licence applications, merchant negotiations and other agreements that need to be progressed.’

As more and more consumers were forced to go online throughout the pandemic, Klarna’s rise in the past 12 months has been nothing short of meteoric. In March, the company nearly tripled its valuation to $31bn through a private fundraising round, securing its crown as Europe’s highest-valued private Fintech. An initial public offering seems increasingly on the cards.

M&A related to market expansion has been a particularly busy area of focus as the bank expanded its BNPL offering into Australia, Belgium, Italy and Spain in 2020. With a further four market launches planned this year, Hållén says it has been an exciting time for his team: ‘That type of market expansion is so fantastic for any lawyers to be a part of because it really forces them to step outside of their comfort zone, their own jurisdiction and work with outside counsel and others for that particular new market. They need to understand how it works, how to take a very specific element for the product or examine part of the legal aspects in terms of product development for those particular markets. It’s very challenging, but challenging in a good way.’

Hållén is looking to recruit commercial lawyers on the West coast in the US and the bank’s expansion will require legal teams on the ground in Australia and continental Europe. Although he recognises that some lawyers are happy to work around the clock, he feels it’s important to have lawyers working in real time in each time zone. ‘The time zone differences [are] one issue, but for practical purposes we need legal support in Sydney to support the growth in Australia,’ he says.

‘We’re also really looking at it from the point of view that we don’t want legal to be a bottleneck in our growth in any way’, he adds. ‘That means that we have to prioritise and work on recruitment. That’s one of the most important things that I do. I think probably the most important thing for any general counsel is to really prioritise recruitment.’

Rising regulation

While the banking and finance sector is already heavily regulated, there has been a groundswell of support globally to regulate the BNPL sector amid concerns that it’s pushing consumers, particularly the younger generation, into debt.

Hållén was involved in talks on this issue in Australia in 2020 shortly before lockdown hit. ‘It wasn’t the last flight out of Sydney, but it felt like it,’ he says. Together with Francine Ereira, Klarna’s General Manager for Australia and New Zealand, he met with legislators to discuss regulating the sector. ‘It was interesting for them to bring Klarna into the discussion in Australia and how they would look at it from our perspective – the bank perspective – and we provided them with hopefully a few additional insights. That is one of the benefits of being a global player in this sector. It allows us to be a relevant speaking partner, providing insights across jurisdictions to regulators and legislators and how ultimately to achieve the best protection for customers.’ The Australian Finance Industry Association introduced a voluntary BNPL industry code of practice on 1 March 2021.

There has been movement on regulating the sector in the UK too. In February, the Financial Conduct Authority (FCA) published a review conducted by its former Interim Chief Executive, Christopher Woolard CBE. It cited that BNPL represented ‘significant potential consumer harm’ and urged legislators and the FCA to regulate the sector ‘as soon as possible’. The Financial Services Bill received Royal Assent at the end of April. Under the terms of the new legislation, HM Treasury is permitted to bring interest-free, BNPL products within the scope of FCA regulation.

Hållén says Klarna, which has provided comments to the government throughout the review process, welcomes the move. ‘It’s pretty clear that regulation hasn’t really kept up with how consumers have changed their behaviour,’ he says. ‘You have to start with the consumers’ point of view. That’s what's most important. That’s what we care about and that’s what the regulators care about. Having clear guidelines and a clear baseline will be beneficial for the consumer, ultimately, so that that is the clear driver.’

He says the regulation will create minimal disruption for the bank. ‘I wouldn’t say the impact will be massive, rather that we are very used to it,’ he says. ‘That’s how we’ve operated for a number of years. If you look at Klarna compared to all other peers, with a few exceptions, we are the ones used to serious regulation. Compared to most players, we are a regulated bank. They have been used to being able to operate without being regulated. While we are coming from the other way, which I think is a clear differentiator. Most of the products that we offer are also regulated from a consumer point of view as well.’

As customers continue to shape and influence online retail habits and demands, Hållén says Klarna is increasingly aware of what matters most to consumers. ‘It’s really important to us as a company that we drive positive change for people and the planet and be part of the solution when it comes to global challenges such as financial anxiety, inequality, and the deteriorating health of the planet,’ he says.

In April, the bank tapped into the conscious consumer market by launching a new in-app carbon tracker, which gives users the ability to monitor their carbon footprint as they shop.

The move forms part of Klarna’s broader environmental, social and governance (ESG) strategy, and Hållén is excited about the bank’s other initiatives in this area. ‘We also set new emissions targets for Klarna, coupled with an internal carbon tax that will be donated to high-impact climate projects. We are also planning to allow consumers to donate to projects as they purchase so they can help us make a positive impact too. So it’s small steps, but we are hoping to really make a difference.’

Wellbeing during the pandemic

As with all general counsel, the pandemic has had a palpable impact on Hållén’s legal team. As remote working has become the norm, he’s been mindful that team members in different jurisdictions have been dealing with a range of challenges over the past year. ‘My experience and my family’s experience has been very different from my colleagues sitting in Germany, sitting in Columbus, Ohio or Sydney, Australia,’ he says. ‘It’s been very different in terms of how we can move or shop, whether you have your kids at home or whether the schools are closed or not.’

He notes there have been a number of considerations. ‘It’s very hard to have a one-size-fits-all solution. And it’s also very easy to fall into the trap of thinking that everyone is in the same position as you are, which is clearly not the case when we hear of Stockholm being the outlier.’

Hållén hasn’t had it easy, though. As well as his work commitments, he became a father for the second time in the first quarter of 2021. He counts himself lucky that his parents have already managed to meet their newborn after not being able to see their other grandchild for over a year. ‘We’re not unique in any way, but it becomes so evident when you see it from your parents’ perspective, when they haven’t seen their grandchildren,’ he says. ‘That was fantastic, I really wish for everyone to have that experience.’

Fika – the Swedish culture of making time for friends and colleagues over a hot drink and a snack – has been an aspect of working life that Hållén and his team have sorely missed over the past year. ‘It really doesn’t do it best when you do it virtually – you need to do it in person with coffee or tea and preferably cinnamon buns,’ he says. However, he has gone some way towards recreating the Fika custom in his team’s everyday interactions, albeit remotely.

‘What it comes down to is taking the time to check in with your colleagues,’ he says. ‘That’s what we talk about with everyone within legal that has a leadership position: they need to take the time to check in and ask people how they are doing. That can be basic things such as having virtual coffee check-ins, trying to send care packages and trying to have as many, engaging, and cross-collaborative projects as we can. But also, forcing our colleagues to sometimes turn off Google Hangouts, because there’s a Google Hangout fatigue.’

Hållén says these efforts have helped the team maintain some semblance of Klarna’s vibrant working culture. ‘Whether you like it or not, you’re spending a lot of time at work,’ he says. ‘One of the things that I feel extremely lucky and passionate about is that I have fantastic colleagues. That’s what, in my opinion, makes Klarna so great. My colleagues are better than me at so many things and they teach me things all the time.’

Remote working is likely to continue for some time, but Hållén believes the bank’s international outlook will help see it through this difficult period. ‘Normally we have 80 or 90 nationalities here in our head office in Stockholm. That type of diversity is contagious. It lays a great foundation for passion. People have come from all across the world to work here and that passion is contagious. You’re investing energy into what you’re working on, but I also feel I get lots of energy back, both from lawyers and non-lawyers.’