Tesco confirms £40m delay to bank systems upgrade

Customer troubles this summer persuade Tesco to slow down bank system migration

Retail giant Tesco will delay planned updates to its core platforms for its banking operations after a series of glitches this summer left customers unable to access their accounts online. The delays will cost Tesco in the region of £40m.

Tesco said in its latest trading statement that it was close to completing the migration of its banking and call centre platforms for Tesco Bank, but that this summer's troubles had convinced it to extend the project.

"We have taken the decision to slow down the introduction of new products until we have settled in the new bank team, processes and systems," it said in a statement.

That decision will delay Tesco Bank's transition to a full service bank, with the launch of its mortgage products delayed until 2012.

It also means that Tesco will have to absorb the running costs of operating the old and new IT systems.

As a results, Tesco expects profits in the second half of the year to be £40m lower than initially forecast.

Tesco said it had spent £100m in the first half of 2011 on its IT migration programme.

Tesco Bank was originally established as a joint venture with the Royal Bank of Scotland, but has been wholly owned by Tesco since 2008.

Tesco moved to a new banking platform shortly after, replacing its systems with ones from Finserv, which were supposed to ease the transition to becoming a full-service bank.