I think that the code challenge was mostly aimed at students, where the time spent writing something semi cool is not just wasted time. Having been on the hiring side for software developers at Klarna I have seen too many people in interviews that can't "write a function that counts the number of words in a sentence, in any programming language". So having something that measures your competence pre-interview is good.

When I got hired by Klarna I never had to do any programming. I had actual code out there in the wild that I could point to.

Getting to the interview stage at Klarna is easy. Getting an actual job offer is harder.

(Btw. If you don't like IQ tests then don't look for a job at Klarna...)