A British state-owned bank is reconfiguring its modernization project, including considering reducing connections with legacy systems, as it tries to claw back schedule and budget overruns that are far beyond early plans.
The National Savings & Investment (NS&I) transformation program is already £1.3 billion over budget and four years late. In December, chief executive Dax Harkins told MPs the organization was outside HM Treasury spending limits and timetable under a revised plan from systems integrator Capgemini.
In a letter to the Public Accounts Committee (PAC) this week, he confirmed “that plan is currently forecast to complete outside the March 2028 target date and outside the agreed budget” set in the Spending Review last year.
He told Parliament’s spending watchdog: “We recognize the challenge this presents and are working on options to improve the cost and time of program delivery, including what would be required to live within our Spending Review budget. The new options include reducing the need to connect our older legacy systems with our new services and new banking systems, and areas where we could reprioritize work.
“Work is underway now to assess the potential risks, impacts, and benefits of each option to inform our decision. This includes reviewing finances and dependencies for all options, and producing a draft business case for the preferred option, with the final decision on the delivery plan to be taken by ministers.”
NS&I is an executive agency of the UK’s Chancellor of the Exchequer.
Last year, the National Audit Office (NAO) slammed the program [PDF], which includes both a new customer-facing technology and banking engine, pointing out that it “carries an extremely high level of risk.”
In 2020, NS&I began a business transformation program called Project Rainbow, which aimed to reduce the bank’s running costs and replace its 20-year outsourcing deal with Atos by splitting the work into five separate contracts.
In 2014, the bank awarded Atos a new contract to run until 2021, and then extended it until 2024 and again until 2028 without competition.
As well as being the incumbent supplier for the legacy system, Atos was awarded a £474.4 million ($612 million) contract to build systems including modernizing the core banking engine, as well as running payment, reporting, and business-to-business services from December 23, 2024, until March 31, 2028.
NS&I had originally gone to market to launch the competition for a new core banking, payments, and reporting system. However, the government-owned bank later said the award was made to Atos “as the incumbent service provider, Atos and its key sub-contractor(s), are the providers of the existing NS&I core banking platforms, which rely on interdependent leveraged technology and resources.”
The total cost of the program is expected to hit £3 billion until 2030-31, including its contract with Atos and other running costs. The total cost increase is set for £1.3 billion compared to the 2020 business case, the NAO said in November.
In his letter to the PAC, Harkins said NS&I was working with Capgemini to finish its options analysis by the end of March 2026. By June 2026, it hopes to get plans approved by HM Treasury. ®
