In 2013–14, we set our ‘think ahead’ strategy for the five years from 2014–15 to 2018–19. It focuses on meeting our core remit of delivering cost-effective financing for government while setting out what we have to achieve to meet the targets of successive Spending Reviews. Following the Spending Review 2015 settlement, which requires us to reduce our real-term costs by 25% by 2020, we reviewed our strategy, revising one objective relating to our people and values and adding a new one, focused specifically on reducing our operating costs.
Our strategy works within an operating framework which seeks to balance the interests of our savings customers by offering a fair rate; the taxpayer by delivering long-term cost-effective finance; and the stability of the broader financial services sector by acting transparently and maintaining an appropriate competitive position.
Meet NS&I’s core remit
Our core remit remains the same: to help reduce the cost to the taxpayer of government borrowing now and in the future. This year we delivered £11.8 billion of Net Financing to the Government. This exceeds our target but was managed in conjunction with HM Treasury, recognising the challenging and volatile market conditions and the outlook for our customers. Nevertheless, our Value Indicator, which compares the costs of using NS&I with the costs of government borrowing via the gilt markets, showed that we delivered £74 million of value to the taxpayer, more than covering our costs.
Deliver an easy and appealing retail digital customer experience
We completed a long-planned project to upgrade the secure transactional section of our website. The secure pages now have the same look and feel as the information on the general pages, and are optimised for mobile and tablet use. It is now easier for customers to see their holdings across different NS&I products, and we piloted a web chat facility to help customers online. We have also continuously improved our prize checker app, adding new functionality including fingerprint identification in the latest version.
Achieve retail channel shift to digital channels (phone and online) of at least 75% by 2018-19
This year, 68% of all retail interactions were digital, compared with 65% in 2015-16; the challenge ahead is to move some of our more complex legacy processes on to digital channels so they are easier for customers to use and more streamlined for us as a business. In total, 92% of new sales were through digital channels – up from 65% last year – and more than half all Premium Bonds prizes are now paid electronically. Some 3.7 million customers have registered for online services with close to 2.2 million customers choosing to go ‘paperless’.
Identifying customer needs, developing new products and targeted proportions
Our most popular and best-known product, Premium Bonds, celebrated its 60th anniversary this year. This gave us an opportunity to inform customers about digital options for managing their Premium Bonds, including having prizes paid directly into their bank account.
Move progressively towards a self-funding model
Our business-to-business services, which use our operational resources to deliver payment processing services on behalf of other government departments, have continued to grow.
This year saw preparations for the launch of Tax-Free Childcare in April 2017 and our selection, following public consultation, to work in partnership with HMRC to provide the Government’s Help to Save scheme. Together, these are important steps to achieving our objectives.
Live our values in everything we do
This year, a key priority has been the implementation of our programme to shadow the FCA Senior Managers Regime, covering conduct, customers, culture and compliance. We are also working with Atos to support conduct certification of its staff.
Reduce our operational cost and build a flexible and sustainable operating model
This year, through ongoing channel shift and the growth in our total deposits, our efficiency ratio – the ratio of our total administrative costs to total stock – reduced from 12 basis points last year to 9.4.