Tesco banking on autumn launch for big sector push

Andrew Higginson, head of Tesco’s retail services business, told a retail summit that the group was focused on expanding its own operations.

Tesco announced plans to set itself up as a bank in 2008 when it bought out Royal Bank of Scotland from a financial services joint venture.

While it has launched some products since then, like a fixed-rate savings account, it has focused largely on setting up its own operations, from IT platforms to call centres, and transferring customers to them.

“It has been an incredibly difficult thing to do,” Mr Higginson said, describing how the business has transformed from a joint venture employing 185 people to a team of more than 3,000.

“I do not think there will be too many new competitors appearing, if our experience is anything to go by.”

He said Tesco was near the end of the transition, ironing out glitches that saw some savers locked out of their accounts earlier this month and preparing to transfer 2.5m credit card holders to a new platform in August and September.

That should allow it to launch mortgages in early autumn, a bit later than hoped, followed by tax-efficient individual savings accounts by the end of its fiscal year in February and current accounts in autumn 2012, he said.

The new products would be accompanied by a marketing drive.

“At a time when you are migrating everything, you cannot really have a big marketing push for new customers,” Mr Higginson said, when asked about Tesco Bank’s low profile so far.

Some analysts have been disappointed by the time it has taken Tesco to gear up its banking business, arguing it has missed an opportunity to take custom from established players during the financial crisis and lagged behind new entrants, such as Metro Bank and Virgin Money.

However, Mr Higginson said the group would have competitive advantages over the longer term from its Clubcard loyalty scheme and from its focus on the internet.