The state-owned savings bank NS&I's modernization attempt has been a 'full-spectrum disaster', according to a scathing report by parliament's spending watchdog. The National Savings and Investments (NS&I) organization, known for its popular monthly cash-prize draw for premium bond holders, has been criticized for exposing taxpayers to 'unacceptable risk' due to the spiraling costs of its £3 billion modernization program. The Treasury-backed bank, which also offers a range of savings accounts, launched a business transformation program in 2020, originally called Project Rainbow, aiming to reduce running costs and modernize operations. However, the costs involved in the modernization program have risen dramatically, from £1.3 billion to £3 billion, with 'little transformation' delivered so far, according to the Public Accounts Committee (PAC). NS&I now believes it may need to extend its contract with Atos, a French company that had run NS&I's banking services and IT infrastructure for 27 years, until 2031. The report highlights the replacement of NS&I's core banking engine as 'extremely high risk' due to customer data involved, but the main work has yet to start. NS&I leaders failed to understand the complexity of the bank's modernization program and were overambitious in their plans to finish it by March 2024. The bank also relied too heavily on consultants, spending £43 million on advice, and had no agreed and approved integrated plan, nor the right skills and expertise in place. The Treasury announced last month it would be giving another £109 million to the program, pending parliamentary approval, despite NS&I being unable to say how much money had been spent to date. Conservative MP Geoffrey Clifton-Brown, the chair of PAC, expressed deep concern, stating that the project is 'off-track' and that neither the committee nor the Treasury could gain an accurate understanding of costs and progress. He added that until NS&I lays out a realistic plan for its transformation, the taxpayer is at serious risk of throwing good money after bad. NS&I welcomed the PAC report and its recommendations, stating that its business transformation program is key to continuing to deliver cost-effective finance for the government and the services customers want. It added that it is working on options to improve program delivery and will provide an update on this in due course.
