Kiwibank is operating a high-cost model compared with banking sector benchmarks, and will be seeking to trim fat as it anticipates slower growth for the rest of this financial year, said Michael Cullen, chairman of parent New Zealand Post.
Appearing before the commerce select committee for the postal and banking
SOE's annual parliamentary review, Cullen said Kiwibank's claim to be cheaper than other banks for customers was true.
However, it was not true of the bank's internal cost structures.
"We are not low cost at the present time," Cullen said.
Kiwibank was "staffed and organised on the assumption of very strong growth. As a consequence, its cost ratios are quite high by banking standards."
"We are expecting much slower Kiwibank in the next year, and will be taking the opportunity improve internal structures," he said.
That included both staff levels and improved credit control processes.
There was also a need to assess and reconfigure existing shared postal and banking outlets, as banking demand grew relative to postal services demand at PostShop outlets.
NZ Post also faced questions from Labour MPs on the committee about its proposed "digital postal service," an initiative intended to help NZ Post shore up its revenues in the face of plummeting physical mail volumes.
Postal volumes are now half what they were 10 years ago, and have fallen steeply in response to the prolonged recession, government and corporate spending cuts, and disruption to mail delivery in Christchurch following the two earthquakes in the city.
"Are you really the best organisation to do that when there's a pile of international organisations doing that globally," asked Trevor Mallard.
"There is not yet a market ready proposition," said chief financial officer Brian Yeoman.
"The exact functionality is not yet clear."
The existence of competing secure digital services for delivering communications was one of the reasons NZ Post was approaching the issue with caution, chief executive Brian Roche told the committee.
NZ Post's brand was strong both for custody and delivery of communications, and it believed digital technology was "part of our future", but was still "exploring whether technology is a friend or a foe."
Cullen said NZ Post's "complex structure" was also being addressed this year.
