Tesco faces up to tough times on banking front

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TROUBLED Tesco Bank will update the market later this week on the progress of its latest experiment into in-store banking following disappointing results from its pilot branches.

The Edinburgh-based bank has two test operations in Worthing, Sussex and Coventry in the West Midlands where it hopes for a better response after shutting down branches in Glasgow’s Silverburn shopping centre, Blackpool, Bristol, Long Eaton and Oldham. Coventry was among that first batch and has been refitted for the re-launch. Almost 40 staff were axed or redeployed.

Chief executive Benny Higgins is keen to develop in-store banking as part of the service, but has struggled to persuade customers to combine shopping with sorting out their finances. He has admitted that establishing the bank is proving “very difficult” and has postponed the launch of a current account until next year, apparently to take advantage of new rules that will make it easier for customers to switch banks. It has twice delayed the launch of a mortgage product.

To add to its problems, the bank suffered from an IT breakdown during last summer’s transition of customers from its former partner Royal Bank of Scotland. It prompted group chief executive Phil Clarke to delay the mortgage launch until the glitches had been resolved. But the bank was shaken when Andy Higginson, who brokered the split from RBS, suddenly quit.