Retail giant Tesco is working on the technology migration of its recently-acquired financial services arm ahead of plans to become a " full-service retail bank".

The firm acquired the 50 per cent stake in Tesco Personal Finance (TPF) previously owned by the Royal Bank of Scotland, for nearly £1bn in December. A new team, composed of Tesco staff and financial services professionals, has been appointed to support the goal of expanding its offering in retail banking.

“The new team’s focus for the time being is on migrating systems and customer support over to our own platforms, beginning the development of a branch network in Tesco stores and growing the business, both through existing and new products,” said the retailer in its latest financial statement today.

Tesco IT director of operations and infrastructure Nick Folkes told Computing last month that the integration of TPF is expected to change the shape of the retailer’s store offering, with a common set of services to customers in that area expected to go live over the next two years.

“Our IT strategy is well suited to face the challenges ahead. We invest in technology to reduce the operational cost of the business and make it more effective, and that will remain our focus going forward,” said Folkes at the time.

Tesco reported a profit increase of 15 per cent to a record £3.21bn in the 12 months to 28 February. Overall sales also rose by 15 per cent to £54.3bn – the first time Tesco has surpassed the mark of £1bn per sales week, despite the recession.

The introduction of new in-store checkout technology also contributed to the positive performance as payment processes have become faster and more accurate – the retailer claims around 25 per cent of its UK customers pay for goods via self-service checkouts.

Catalogue arm Tesco Direct, which is managed within Tesco.com, has also delivered positive results. The division, which is focused on selling the firm’s non-food products over the web “is now established and thriving” and clothing is set to be added to the online offering this year.