Tesco Bank, the financial services division of the UK retail giant, has announced that delays to its ongoing IT migration programme will cut profitability by £40 million in the next six months.
The bank used to be a joint venture with Royal Bank of Scotland, and many of its financial products were based on RBS’ legacy systems. In 2008, Tesco bought out RBS’ share and since then has been migrating to new IT applications.
In June of this year, however, some Tesco Bank customers were unable to access their online accounts for many days, due to technical issues that arose during migration.
In its financial report published today, Tesco revealed that it has "taken the decision to slow down the introduction of new products until we have settled in the new bank team, processes and systems, having encountered some technical issues during the summer." Delayed products include Tesco’s planned mortgage offering.
The decision will also extend the bank’s predicted period of increased operational cost, it said.
"Consequently, in combination, these will impact total trading profit during the second half of the current financial year by around £40m against our original internal target," the company said.
That drop is roughly equal to the £44 million in trading profit Tesco Bank made during the first half of the year.