The state-owned savings bank wishes to complete its journey to becoming a fully online retail bank, as well as boosting its digital offering that supports a number of HMRC services

National Savings and Investments has signed a potential £172m deal which it hopes will enable the state-owned bank to reach the “endpoint of the trajectory” to becoming a fully digital organisation.

NS&I, which operates as an executive agency of HM Treasurym entered into an contract with IBM on 13 December. The engagement will last for an initial term of four years and eight months, during which time £111.5m will be spent on delivering and improving digital retail banking services. A further £28.5m will be invested in the banks portfolio of Government Payment Services (GPS) – which includes delivering online saving and childcare benefits services for citizens on behalf of HM Revenue and Customs.

A key objective of the work on retail services will be the creation of a mobile banking app – including functionality for services related to NS&I’s monthly premium bonds prize draws – as well as a “fully functional transactional website”, according to a newly published procurement notice.

“The new service will create journeys and experiences designed to support customers achieve their ‘jobs to be done, reduce customer effort and improve customer experience,” the notice added. “NS&I has transitioned from branch-based banking to our current state as a direct-only business with digital, post and phone channels. This package is intended to bring us to the endpoint of that trajectory, transitioning to a digital first, self-service retail bank, with assisted digital support for customers unable to self-serve. That endpoint will meet customer expectations for effective, digital self-service, and deliver cost-effective operational excellence.”

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The GPS portfolio of tools constitutes “modern, secure and competitive banking and payments services [available] to all government departments, agencies and public sector organisations”. Citizen-facing services delivered by NS&I include HMRC’s Help to Save, Tax-free childcare, and 30 hours free childcare offerings provided by HMRC, as well as the Ministry of Justice’s Court Funds Office and HM Treasury’s Help to Buy Service.

“There is potential for [these] services to expand during the contract lifetime that could result in growth of the outsourced services NS&I may be required to support the delivery of,” the notice adds.

The IBM contract is slated to conclude on 12 August. The deal provides for extensions of up to two years in total, which would increase the value of the contract by £32.5m – taking total spending to £172m.

The digital services engagement forms part of a series of contracts that constitute NS&I’s Rainbow programme – a procurement initiative intended to replace the organisation’s current overarching outsourcing agreement with Atos, which ends on 31 March.

In June last year, NS&I entered into a 39-month contract with Sopra Steria for the delivery of outsourced back-office services. This agreement could be worth up to £200m to the French tech firm.