Key Highlights
- NS&I’s IT transformation program is £1.3 billion over budget and four years late.
- The bank is considering cutting connections with legacy systems to meet its timeline.
- In December, the chief executive Dax Harkins informed MPs that the plan was outside HM Treasury limits.
- Capgemini is assisting NS&I in analyzing options for program delivery and cost reduction.
The NS&I IT Overhaul: A Costly Mess
NS&I, a British state-owned bank, finds itself at the crossroads of a costly IT transformation project that has spiraled into a financial and schedule nightmare. The National Savings & Investment (NS&I) has been on an uphill battle for years, with the modernization program costing £1.3 billion more than initially projected and being four years behind schedule.
Back in 2026, chief executive Dax Harkins informed MPs that the organization was already outside HM Treasury’s spending limits under a revised plan from systems integrator Capgemini. This revelation came as no surprise to industry insiders, who have long watched with skepticism as NS&I has struggled to stay on track.
Legacy Systems and Budget Overruns
The core of the problem lies in the bank’s reliance on legacy systems, which have become increasingly cumbersome over two decades. According to a letter to the Public Accounts Committee (PAC), Harkins confirmed that the plan was currently forecasted to exceed both budget and timeline targets set during the Spending Review last year.
“We recognize the challenge this presents,” said Harkins, adding that NS&I is exploring options to reduce costs and stay within HM Treasury’s limits. The bank is considering reducing connections with older legacy systems as a potential solution, which could help streamline operations and cut expenses.
A Complex Journey with Many Hurdles
The journey for NS&I has been fraught with obstacles from the start. In 2020, the bank embarked on Project Rainbow, aimed at reducing running costs and replacing its 20-year-old Atos outsourcing deal. However, Atos was awarded a £474.4 million contract to build new systems including modernizing the core banking engine.
NS&I had initially planned a competitive tender for a new core banking system but decided to give the contract to Atos as the incumbent provider.
The move has proven costly and complex, with the total program expected to hit £3 billion by 2031, including Atos’s deal and other running costs.
Capgemini is now assisting NS&I in analyzing various options for reducing the project’s cost and time, including reprioritizing work and potentially disconnecting from older legacy systems. The bank hopes to finalize plans by June 2026, with approval from HM Treasury pending.
A Lesson in IT Modernization
The NS&I saga serves as a cautionary tale for government agencies embarking on large-scale technology projects. Over-reliance on legacy systems and lack of competitive bids can lead to inflated costs and delayed timelines. As the bank works through its options, it faces a critical decision that could impact both its financial health and service delivery.
The outcome of these deliberations will not only affect NS&I but also set a precedent for future public sector IT modernization efforts in the UK.
So, you might think this is new, but…
It’s just another chapter in the ongoing saga of government IT projects gone awry. Stay tuned as we watch NS&I navigate its way to a hopefully more manageable solution.
