Kiwibank: dwindling need for physical branches

Kiwibank says customers have a dwindling need of physical branches

By Jenny Ruth

Dec. 13 (BusinessDesk) - Kiwibank says the number of customers using its branches has halved since 2015 and that fewer than 5 percent of customers use a branch as their only means of interacting with it, the bank’s chief customer officer Mark Stephen told a parliamentary select committee.

Stephen and executives from New Zealand Post including chair Jackie Lloyd were before the Economic Development, Science and Innovation Committee to explain why New Zealand Post is closing so many branches.

Until recently, all Kiwibank’s physical branches were in NZ Post stores.

Stephen said Kiwibank is adapting to suit changing customer preferences, although it does still see a role for physical branches.

In Ashburton, for example, where NZ Post has closed its branch but appointed two new franchisees with stores within 400 metres of the old branch, Kiwibank is planning to open a new stand-alone store, once it secures suitable premises, he said.

National Party MP Brett Hudson questioned whether closing physical branches was giving other banks a chance to steal a march on Kiwibank, or whether it is “simply ceding market share” and whether it is still able to provide customers with the same level of service.

Stephen said Kiwibank is “a challenger and we will be a challenger” and that’s one reason why it is opening stand-alone branches independent of NZ Post.

“It does mean we see a role for a physical presence,” but that it will be a matter of balance and “will be driven by the changing needs and preferences of our customers.”

Stephen acknowledged that “there’s always risk in change,” but that Kiwibank’s experience so far has been that any loss of customers due to branch closures has been modest.

But both NZ Post and Kiwibank have been consulting with local communities and conducting other research before closing branches – “these are not decisions we’re making on the fly,” Stephen said.

NZ Post acting chair Jackie Lloyd told the committee the postal service has 79 stores remaining and that it does plan to continue closing stores.

The business is handling a million fewer items a week and losing $30 million in revenue each year.

Nevertheless, moving from company-owned branches to franchised stores is not only reducing costs but is also offering customers better service in the form of longer hours.

For the franchisees, taking on an NZ Post business to augment their existing business, usually bookshops or pharmacies, provides them with the benefit of increased exposure and additional foot traffic, Lloyd said.

In some cases, as in both Ashburton and the Wellington suburb of Newtown, single branches have been replaced by two franchisees – NZ Post now has 880 franchisees.

(BusinessDesk)

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