February 8, 2022

Why Klarna's new credit card leaves Santander's Zinia in the shadows

Could 2022 be the year legacy banks fight back better against those pesky upstart fintechs? Fintechs still seem to have the upper hand.

Leon Gauhman

4 min read

Could 2022 be the year legacy banks fight back better against those pesky upstart fintechs? Warchests are being readied, from JP Morgan committing $12bn for tech to HSBC doubling down on renewed digital investment.

This year’s first proper skirmish saw venerable legacy bank Santander announce the rollout of its buy now, pay later (BNPL) brand Zinia on the same day as Klarna launched a credit card in the UK.

A Santander exec positioned Zinia as part of an “offence strategy” with the bank gearing up to be a “formidable competitor" to its digital-first rivals. Yet, for all this fighting talk, market-leading fintechs don’t need to run for cover just yet.


A rushed concept?

Klarna’s move into plastic may seem counterintuitive, but dig a little deeper and the advantages of this pivot are clear. Similar to Amazon opening stores, the Klarna credit card drives BNPL into a physical form for the millions of consumers still interacting with a bricks-and-mortar world.

It’s also an attempt to reframe credit cards for its millennials and Gen Z customers. For a cohort that instinctively distrusts conventional credit cards, Klarna redraws the playbook: customers have to pay their bills within 30 days, with further payment options under consideration. A credit card could also be a shrewd plan B should the UK’s regulators crack down on BNPL.

Klarna redraws the playbook for a cohort that instinctively distrusts conventional credit cards

By contrast, Santander’s foray into BNPL makes sense but lacks both style and substance. Despite its parent company — a 160-year-old brand — boasting $120 billion in assets, Zinia feels like a bungled follow-the-leader product.

True, Zinia promises friendly repayment terms: consumers can pay interest-fee in 14 days, 30 days or in instalments both online and physically in store. The bank claims 2m customers already use its BNPL solution in Germany and presumably hopes to build on — rather than cannibalise — its 19m credit customers.

Yet, Santander’s product has all the hallmarks of a rushed concept. Zinia’s landing page reveals a young woman winking incongruously, a circle of dancers holding a candle and a hastily written corporate statement about disruption. In the absence of a more considered approach, it will struggle to play catch-up with Klarna’s 90 million global users.

Next-gen consumers

A key Klarna strength is that it understands its target market of Gen Z and millennials and knows how to enable and support the lifestyle and look that they want. A good example is the creation of its influencer council in 2021. This sense of connection with consumers will surely carry over into its plastic product. 

By contrast, Zinia is entering the market with a focus on trust, security and the prestige of its parentage. The rise of digital challengers like Monzo and Revolut, who both have designs on BNPL, shows that prestige and trust alone are not enough to win young consumer hearts.

Zinia risks being the Bing to Klarna’s Google

In an era of contactless payment, consumers see security as a given, not a USP. Instead they’re looking for brands that intuitively understand the pattern of their lives. As players pile into BNPL, Zinia risks being the Bing to Klarna’s Google.

Yes, Klarna faces the prospect of blowback from regulators: it needs to tread carefully around responsible lending or risk permanent damage. But its incisive grasp of next-gen finance remains — for now — a huge and unrivalled USP.

The lifestyle crossover

Brands moving into a commodity-based category must offer a key differentiating factor. Zinia’s emphasis on security, while necessary, is not compelling enough. Klarna's website feels more like a virtual shopping mall than a finance portal. With this strategy, it moves into the more ambitious realm of life partner for consumers seeking a holistic experience.


With big tech seeking to integrate finance into a wider ecosystem of products and services, financial services brands need to understand that consumers are more interested in what finance can help them do or pay for, than in the finance product itself.

PayPal’s rumoured interest in Pinterest may not have resulted in a deal, but like AliPay in China, it shows that financial service providers can’t live in a vacuum anymore. The mantra about banks or financial services being “safe as houses” has moved on: now it’s about the lifestyle and choices that finance can enable.

Merchants matter

Another facet Zinia needs to think about in keeping pace with Klarna is its merchant community. The BNPL pioneer boosts a sophisticated range of marketing tools for its 250,000 retailers. To achieve the same, Santander’s Zinia must not only bolster its existing relationships with 63,000 affiliated merchants; it also needs to echo Klarna’s close support of retailers as they tackle challenges such as top-line growth, sustainability and returns.

The road ahead

The BNPL market is fast-moving and scrappy: it could do with more contenders throwing down the gauntlet on next-level customer experience and transparency. With the backing of Santander, Zinia could have been a really bold and imaginative product. It still can be — but change must happen quickly.

In what is an increasingly lifestyle-oriented, socially powered sphere, Zinia needs to position itself beyond its opposition to challengers, as an indispensable and trusted lifestyle facilitator. Until it does, the BNPL battlefield remains wide open.