Kiwibank says it won't be stepping in to fill the void left by Westpac's proposed branch closures.
First Union says Westpac is planning to close up to 19 branches across New Zealand many of which are in small towns.
Three towns - Ranfurly and Fairlie in the South Island and Raglan in the North Island would be left with no full-service bank branches if Westpac goes ahead with its plans leaving residents driving up to an hour to get to their nearest branch.
Paul Brock, chief executive of Kiwibank said whilst the bank was always looking at opportunities, it did not see the proposed Westpac departures as a reason to move into those towns.
"I don't see any plans in that space at that the moment."
Brock said Kiwibank had 250 locations throughout New Zealand.
The bank has been trialling a bank only branch in Hamilton over the last year which had gone well and there were plans to trial another one in Auckland and Christchurch.
But much of its focus is on the digital side of the business and the bank said 90 per cent of its transactional business was now done online while 31 per cent of product sales to existing customers were done online.
Westpac has pinned its reason for considering the branch closures to the rise in online transactions.
"Currently more than 85 per cent of service transactions with us take place outside of a branch," the bank said when the closures first came to light a few weeks ago.
Ranfurly residents will hold a community rally outside their branch today to protest its potential closure.
Organiser Amie Pont, who owns a shop in Ranfurly, told the Herald earlier this week that the Westpac proposal had come as a shock.
"As a community we feel we are entering into a growth phase. Tourism is growing...we've had a bit of disbelief."
She said it would hit elderly residents hard and make it difficult for local community groups to get access to cash.