AAP Finance

Heritage Bank to take a tilt at Sydney

By AAP Newswire

Heritage Bank is set to open two branches in Sydney this year as the Queensland-based mutual eyes a bigger slice of the post-royal commission market.

Heritage said it was bucking the industry trend by opening new branches at Castle Hill and Parramatta - the first locations outside its home state - with plans afoot to reach even further into the Sydney and Melbourne metro markets.

Chief executive Peter Lock said Heritage was excited to be taking the fight to the traditional banking heavyweights, who he said were smarting from their battering at the Hayne inquiry.

"We think it is a great time ... no customer-owned bank was required to give evidence at the royal commission, so there is a higher level of trust there," Mr Lock told AAP.

"The other banks, we believe, are in inherent conflict, because they have both investors and customers."

Mr Lock said talk about the "imminent demise" of physical branches was exaggerated, and said closing them showed a lack of respect to existing customers.

NAB this year was moved to pause the cost-cutting closure of regional branches amid disquiet from customers over the plans.

"We know that there is a danger, particularly with traditional banks, that they become fascinated with the shiny new thing, which is digital, and in doing that they lose what we see as respect for their existing clients," Mr Lock said.

"A lot of their existing clients are elderly, and are against being forced to use the digital channel ... they want the comfort and assurance there is someone to talk to."

Mr Lock, has been head of Heritage Bank since 2015 after holding senior management roles at the Bank of Melbourne, St George Bank, and the Commonwealth Bank, following a career with the National Australia Bank.

He said Heritage was not blind to the fact that technology can make a difference.

"But we just don't think that inflection point is now," he said.

"The emergence of neobanks ... they have no physical presence, so if something goes wrong who do you talk to?"

Heritage currently has a network of 59 branches across south east Queensland and, with 800 staff and $10 billion in consolidated assets, it markets itself as the nation's largest customer-owned bank.

Its branch in the Castle Towers Shopping Centre is scheduled to open in late October while the Westfield Parramatta branch will open in December.

The two new branches are part of a longer term strategy for Heritage to open more branches in the Western Sydney area, as well as in suitable areas in Melbourne.

UBS analysts said on Wednesday record low interest rates have opened the door for smaller competitors to challenge the traditional heavyweights, who face a choice between protecting net interest margins or maintaining market share.