Bank rejects big offices to get closer to customers

Expert thinks Westpac's about-face will start a move towards boutique banking. Photo / Northern Advocate

After a decade of thinking big, Westpac Bank is going back to thinking small.

And one expert believes its switch will start a trend that will be followed by the other main banks.

He predicts big branches will be replaced by boutique-style operations which will give better local service to customers.

In a move that reverses changes during the 1990s - which chief executive George Frazis says were a mistake - Westpac announced last night that it is opening 10 new community branches in Auckland.

Local bankers will be given the power to lend money - something taken from them more than 10 years ago.

"That was a flawed strategy and one that I don't agree with in any way," Mr Frazis said.

"My sense is that you make better decisions if they're made closer to the customer."

The director of Massey University's Centre for Banking Studies, Dr David Tripe, said banks were likely to gradually reduce the number of larger branches and set up more smaller ones.

But Mr Frazis said the immediate purpose of the changes was to put "more bankers in more places" to increase efficiency and reduce errors.

He could not rule out some redundancies but said 160 frontline banking roles were being created, some of which would be filled by current staff.

"We are moving decision-making back to the local bank manager and closer to customers," he said.

"This reverses a trend in banking over many years and one that, in hindsight, was a mistake and inhibited us from appropriately supporting our customers."

Mr Frazis said the new branches would have all the features of a main branch but would be less than half the size.

They marked a fundamental change of direction for Westpac.

"Retail customers will also see changes, with quicker decisions," Mr Frazis said.

He said the recession had shown the need for the bank to work more closely with customers.

Physical differences between the new branches and existing ones include a secure foyer with round-the-clock access to automatic teller and coin-counting machines.

No branches are expected to close as part of the developments.

Although Westpac described the earlier changes to banking as a mistake, Dr Tripe said the branches being opened now were "not anything like the sorts of branches that they closed in the 90s".

"Technology has been a major factor in this, in that people don't need to go into the branches in the way that they used to.

"The function of bank branches and the role that they can fulfil are changing in response to technological change."

He said wide-scale redundancies were unlikely because staff turnover generally solved such problems.

Dr Tripe believed the changes would be positive for customers because they increased the availability of branches.

"It's hard to see that there's anything much in the way of negatives."

ASB's chief executive for retail banking, Ian Park, said the bank had started putting in smaller branches about two years ago.

Kiwibank said it was already set up in smaller communities because of its franchise arrangement with NZ Post.

* Where and when

Westpac's schedule for introducing its new Auckland community branches:

Huapai - being opened tomorrow by Prime Minister John Key.

St Johns and Epsom - being opened on December 16.

Takanini, Mangere, Highland Park and another four branches at locations yet to be announced will be opened before October next year.