National Australia Bank's (NAB) head of retail operations says the bank is considering setting up shop in smaller retail outlets as it looks to diversify its customer facing channels.

Andrew Thorburn, who heads up the company's 817 branches, has designs to keep the bank's product lines simple while making its customer reach more sophisticated.

As the major banks face increased competition on both the products and customer service fronts, Mr Thorburn believes his company needs to improve both its customer service and efficiency.

We'll be reducing the size of branches - I think our new branches will be using a much smaller footprint, more efficient technology will help that, he said.

We need to think about other distribution outlets that we could potentially work with and they're many and varied.

You need other retailers of varying shapes and sizes but we may be able to think about sharing a property and then distributing our products and services together.

However, unlike Commonwealth Bank's Ezy Banking alliance Woolworths stores, Mr Thorburn says he want to share floor space with smaller vendors such as pharmacies, newsagents and post offices.

I think the key things there are smaller footprints, alliances, planners, and other retailers of interest, he said.

And then you need to look at things like the internet platform and ATMs and mobile banking.

What we'll be doing is experimenting with the different options to try and get the optimum mix - that's a really big challenge.

But while banks increase competition on the product innovation front, Mr Thorburn is cautious about burdening consumers with a suite of new and fancy options and has veered away from products such as reverse mortgages.

You need to keep alert to new opportunities and you need to be innovative but you need to be careful you don't overload, he said.

Sometimes we're in the lead and sometimes we're not.

Where the value is just keeping it simple around the few products - two or three mortgages, a credit card or two, you don't need 50 you just need a few.

Since joining the bank in early 2005 following, Mr Thorburn has helped bring the bank's struggling flagship retail arm to a more stable state.

As part of his remodelling program, Mr Thorburn replace the bank's 20 year old teller technology and brought customer service training up to speed.

The bank has upgraded 282 branches and plans to open at least five new ones across Australia before the end of the year.

And the recent creation of 70 new regional markets has given local branches more autonomy, helping them interact with their local customers he says.