Tesco has progressed plans to compete with the UK’s High Street banks by appointing Fiserv to provide its IT systems.
The supermarket giant recently renamed its financial services operations “Tesco Bank” and its partnership with the global financial technology group provides further evidence of the seriousness of its retail banking ambitions.
According to Fiserv, the firm will be providing “the foundation of account information and banking transactions for Tesco Bank customers”.
The group’s managing director Europe bank solutions, John Bower, comments: “Fiserv will focus its expertise to help Tesco transform several business processes, creating a best-in-class customer experience in financial services.”
Tesco Bank is currently the UK’s largest supermarket bank, with over six million customer accounts across 28 financial products and services: principally, insurance, credit cards and personal loans.
However, a report published earlier this year by Defaqto concluded that supermarkets such as Tesco could be in a strong position to compete with High Street banks, once existing personal finance offerings are expanded to include current accounts.
In a report entitled “Retail Banking: Challenging Times”, the financial analysts suggested that brand recognition leaves supermarkets well placed to enter the full banking service market.
The report’s author, David Black, believes that supermarkets generally enjoy “impressive customer image, brand recognition and the trust of their customers”, which when coupled with the fact that “a member of just about every household has to physically visit a grocery store or its Internet site, at least once a week cements the potential attraction”.
A further incentive could be the ability of supermarkets to cross-subsidise, as the UK moves into a period when banks will have to charge fees for current accounts.