TESCO Bank has announced the opening of its seven millionth account as the company makes the final preparations for its key assault on the established high street institutions with the launch of current accounts later this year.
Customer account numbers at the Edinburgh-based bank are up by 1.2 million, or more than one- fifth, since the supermarket giant bought Royal Bank of Scotland out of their joint venture in 2008 in a £1 billion deal.
Headed by former RBS and Halifax Bank of Scotland executive Benny Higgins, Tesco Bank has picked up customers by launching new products including mortgages, individual savings accounts and box insurance, a form of car insurance for young drivers in which a device is placed in the person's vehicle to monitor how they drive.
Loading article content
Mr Higgins said: "Since 2008, we have invested to build a bank for Tesco customers.
"Our goal is to win the trust of our customers by offering straightforward, convenient, transparent products which reward loyalty. We are delighted to be serving more customers in more ways than ever."
Tesco Bank was initially seen as a potential serious challenger to the established high street names at a time when the Government was keen to bring more competition into the sector. But it took several years to transfer accounts on to its own systems and took longer than initially anticipated to bring key new products such as mortgages and current accounts onto the market.
In 2012, Tesco chief executive Philip Clarke, who has also been battling problems in its UK grocery business, apologised to customers who were frustrated by the delays.
Nevertheless, over the past six years, Tesco Bank has become a sizeable presence in the Scottish financial services sector.
The bank now employs 4000 people including 2000 in Glasgow and 1300 in Edinburgh. The remainder are in Newcastle.
Its first major move was to launch mortgages. These had been expected to come to the market in 2011. They were eventually launched in 2012 and customer balances for home loans now amount to £500 million.
The bank has been one of the beneficiaries of the Bank of England's Funding for Lending Scheme, which is intended to direct cheap financing to institutions to encourage them to expand lending.
Over the past six years, Tesco Bank's deposits have grown by 58% and customer lending increased by 64%.
The bank calculates that one in eight credit card transactions in the UK is made with a Tesco Bank Clubcard Credit Card.
It also has a strong online presence, with 86% of transactions completed online.
The bank plans to launch a current account in the first half of 2014. It had originally been pencilled in for 2012.
Tesco said current accounts would be "the final strategic building block" and would allow Tesco Bank to offer a full range of the core retail banking services.
Tesco Bank's trading profit for the first half of its financial year was £88m, down from £94m the previous year as it was hit by the run-off of legacy insurance business.
Rival Sainsbury's Bank has set out its own ambitious growth plans after its supermarket parent concluded the buy-out of Lloyds Banking Group from their joint venture at the end of last month. It is going through the process of building and transferring customers on to its own systems.
Sainsbury's Bank said last week that is 320 headcount in the capital would grow by up to 80 during the current year.
However, it said it would not offer a current account, arguing that the grocery chain already had a strong relationship with customers.