Retail giant Tesco is to open a contact centre for its finance operations that will employ 1,000 people.
Tesco said in April that it will buy core banking system software this year to support its plans to open bank branches in its UK stores.
The centre in Newcastle will manage customer sales and service for Tesco Bank's home and motor insurance. Tesco has partnered Fortis UK to provide insurance.
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Tesco Bank hopes to offer current accounts in the next two years depending on the availability of the right technology.
Andrew Higginson, chairman of Tesco Bank, said Tesco is building a different kind of bank. "This new customer service centre will help us provide our banking and insurance customers with the same great service they have come to expect in our stores. It is an important step forward for the business and will support our ambitions to bring great value new insurance products to many more customers."
According to research from Celent, banks will face growing competition from non-bank financial service providers using new systems to deliver services such as Web 2.0 applications.
"New players and new ways of doing business in terms of alternative banking systems will start sprouting up," said Celent. These include retailers, phone companies and pre-paid card suppliers.
Tesco, like other non-bank financial service providers, hopes to take advantage of the squandered reputation of banks following the credit crunch.