On Thursday, Gail Kelly  announced she would retire in February, after a seven-year stint that has delivered shareholders a total return of around 25 per cent, including share price gains and dividends.

The bank also has the lowest cost structure of the big four, and the strongest capital position at a time when banks are facing tougher rules that threaten to dampen returns.

After playing a key role in developing its strategy - currently focused on aggressive growth in domestic home and business lending - Mr Hartzer vowed to deliver more strong performances to shareholders.

Key priorities included using technology to improve customer service, while also becoming more efficient at a time when banks face growing competition and tougher regulations.

"I'm very proud to say that I've played a role in developing that strategy and so we'll continue to deliver the strong performances we have, we'll continue to focus on serving our customers well," he said.

The appointment of Mr Hartzer - a former top banker at ANZ and Royal Bank of Scotland - comes as banks are benefiting from very favourable conditions with few borrowers defaulting. However, technological change means they are facing new types of competition from non-bank businesses.

Mr Hartzer signalled this would be a central focus.  The bank would "push boundaries" in its adoption of digital technology, and said it had an opportunity to become more efficient.

"It's a time of great change and that's a time of change that creates opportunity for our customers, opportunity for the country and opportunity for us internally, to run ourselves more effectively, more efficiently," he said.

Westpac shares dropped 1.1 per cent after news of the retirement of Mrs Kelly, a 35-year veteran of banking whose first job was a Latin teacher before she became a bank teller in Johannesburg.

Key achievements during Mrs Kelly's tenure included the $18.6 billion takeover of St George, and her emphasis on the advancement of more women into senior management positions within the bank.

While it had been predicted that Mr Hartzer would take the top job at Westpac since he moved back to Australia from a role in the United Kingdom in 2011, Mrs Kelly said now was the right time to retire from executive positions.

"It seems to me that the best time to retire is when the bank is in good shape, when the bank has excellent momentum, when you have a clear strategy in place that is delivering, when you have a high-quality, top-performing team, and when you have strong succession planning in place," she said.

She will continue in other non-business roles including as an advocate for the empowerment of women.

Mr Hartzer's fixed pay will be $2.68 million a year, with the potential to earn a bonus of $2.68m and a long-term incentive payment of $2.5m in long-term performance shares.

Mr Hartzer has previously argued banks needed to be more nimble, saying Westpac tried to "think and act like a 200-year-old start-up company."

His emphasis on the challenge of technology may signal a rise in spending on investment - and pressure to cut costs.

Macquarie analyst Mike Wiblin said that with a new chief executive in place, Westpac's strategy may "evolve," which is likely to require further investment. This often occurs when there is a new CEO appointed.

"We expect that with a changing of the guard there is likely to be a rebasing," Mr Wiblin said.