State-owned Kiwibank will stop accepting cheques by February 28, 2020 and won't issue new cheque or deposit books after September 28 this year.
Chief executive Steve Jurkovich said it was a tough decision to make but for the past five years the use of cheques had been steadily declining.
"With less than one per cent of Kiwibank payments now made by cheque, we've come to a tipping point.
"We've chosen not to invest in a shrinking service and outdated technology, instead we're moving forward and equipping customers for a world that is increasingly digital," he said.
Cheque use in New Zealand has been on a steep decline for the last 10 years.
Payments New Zealand figures show there were 120 electronic payments for every cheque written last year.
That compares to 2010 where there was only 18 electronic payments for every cheque.
Kiwibank is not alone in its move. At the start of this year major retailer The Warehouse also stopped accepting cheques.
A Kiwibank spokeswoman said of its one million customers only 5,400 personal were writing more than one cheque a month.
She said the bank realised that people who used cheques might take the decision badly but because of that it was doing a lot to support them through the nine month transition period.
Last month Kiwibank partnered with Digital Inclusion Alliance Aotearoa and was supporting Stepping UP, an initiative that provides free, community-based training that works to build digital skills and knowledge in communities.
Jurkovich said it had worked with Stepping UP to design and develop online banking training.
The free banking workshops would be piloted in several regions before going nationwide through Stepping UP's 120 community partners.
Training venues included public libraries, schools, and community centres around the country.
"Online tools can offer a more convenient and cheaper customer experience, but there can be barriers to usage.
"This new partnership is about making sure all Kiwis have the same opportunity to build their online skills, feel more included and gain confidence. It will also mean they have access to cheaper and faster financial products and be confident they are doing so securely," Jurkovich said.
Asked if the bank could lose customers as a result of the change the Kiwibank spokeswoman said: "Customers have a choice but our preference would be to prepare people for the change."
Those that used cheques more than five times over the past year would be receiving personal letters advising them of the change.
Kiwibank would also work with business customers and large cheque issuers, including government departments, through the nine-month transition period.
David Boyle, a finance industry commentator and former head of education at the Commission for Financial Capability, said it was inevitable that the days of the cheque book were numbered.
"KiwiBank has taken the plunge many other banks I'm sure have considered or would like to do but didn't want rock the boat with what could be seen as another negative.
"Providing a digital platform that is easy to use and hopefully more cost effective for the end customer has to be welcomed."
But he said he was concerned how our older New Zealanders in particular were helped with the transition especially if they don't have access to the internet or a smart phone.
"It's so important to get that right and give them as much support as they can to make it easier for their customers to deal with the change."
"My mum is 92 and I know she still writes out cheques because that's what she has always done and it would be pretty difficult for her to change."
But he said with the right help his mother would be up for change.