The UK high street bank says the deal will make a significant contribution to its cost review programme, and modernise its telecomms infrastrucuture through the implementation of a new Internet Protocol Virtual Private Network (IPVN).

The bank says that once the new network is installed by Autumn 2003, it will be able to implement new applications, including the planned introduction of CRM software and voice over IP (VoIP) throughout its customer-facing locations.

As part of the contract, Abbey National plans to roll out BT's hosted multimedia VoIP service across its branches. Yasmin Jetha, IT & infrastructure director at the bank says this will enable more collaborative working between staff.

Pierre Danon, chief executive officer of BT Retail, says the firm is looking to build market share in telecomms outsourcing from its current 17% penetration.

He says: "Our capability to provide complete solutions across the full range of voice and data services gives us an advantage over IT-focused competitors and underpins our belief that we will achieve higher rates of revenue growth than the average across the market."

The contract represents a continuation of an existing relationship between Abbey National and BT under which the telco has provided a managed network and applications infrastructure to the UK bank for the past five years.

The new infrastructure will be built on the BT Transform platform - based on Internet Protocol (IP) technology. It enables businesses to access a broad portfolio of voice, data and video services and applications through a single, high bandwidth network.