Tesco will buy core banking system software this year to support its plans to open bank branches in its UK sto...
Tesco Bank hopes to offer current accounts in the next two years depending on the availability of the right technology.
A spokesperson at Tesco said: "We are looking to appoint a banking systems provider later this year with deep knowledge and expertise in UK banking. We are looking for a robust system with the flexibility to enable us to innovate and develop new products and services for our customers."
Off-the-shelf core banking systems are available from software companies such as BEA and Wall Street Systems.
Chris Skinner, CEO at financial services think-tank Balatro, said any company offering current accounts has to ensure availability and consistency. "The main challenge is in the processing and ensuring that there is 100% uptime. They will also have to link the processing with all the other banking channels such as internet, mobile and call centres."
According to research from Celent, banks will face growing competition from non-bank financial service providers using new banking systems to deliver services such as Web 2.0 applications.
Celent expects "new players and new ways of doing business in terms of alternative banking systems to start sprouting up". These include retailers, phone companies and pre-paid card suppliers.
Tesco, like other non-bank financial service providers, hopes to take advantage of the poor reputation of banks during the credit crunch.