Westpac New Zealand's shift to deliver more convenient digital services putting customers in the driver's seat needs to include a reimagining of the nature of work, says chief executive David McLean.

The local arm of Australia's Westpac Banking Corp is into the second year of a three-year digital transformation programme, which generated $11 million of productivity benefits in the six months ended September 30 and saw the bank's expense to income ratio shrink 300 basis points to 41.4 per cent from a year earlier.

Westpac New Zealand's new customer-focus prompted the lender to drop 11 banking fees and the bank reported a 21 per cent drop in complaints about service quality to 9,600 in the six-month period.

"We're in the phase where we've got the capability to do stuff and now we're faced with how we organise ourselves along those lines of what the customer wants, rather than what the bank wants," McLean told BusinessDesk.

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New Zealand's major banks have all been touting their shift to embrace digital services as people become increasingly comfortable processing manual transactions online.

Westpac New Zealand has shrunk its physical branch network to 169 from 189 a year earlier, while generating 27 per cent of sales through a digital platform compared to 17 per cent in September 2016.

The bank's digitally active customers rose to 772,000 from 736,000 a year earlier, while total customers were flat at 1.35 million.

McLean said that's a similar trend across many industries, however, banking differs from other sectors in that it demands a greater level of trust.

"It might be annoying when your phone goes down, but it's much more annoying when you lose money," he said.

For Westpac's workforce that means there will be fewer jobs focused on manually processing transactions, but McLean said there will always be a need for the human touch, and the lender has been investing in lifting that capability, such as taking on more frontline rural bankers to support its farming customers.

"When there's a complicated question people want to talk to a human being, an expert about it," he said, citing the experience of buying a first-home or a business wanting to know what's behind its cashflow.

Westpac New Zealand is leaning on its parent's investment in emerging financial services technologies to get exposure to what might shake up the sector, in what McLean describes as being "the first time there's a real risk of disruption that the whole industry is facing."

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Despite the structural shifts in the sector, McLean is optimistic about the 2018 financial year.

Westpac's core earnings in the 2017 financial year were flat, with the cash earnings buoyed by a reversal of impairment charges on bad debt.