PSIS Ltd became New Zealand's 21st registered bank on Wednesday and has changed its name to the Co-operative Bank.
Chief executive Girol Karacaoglu says the bank aims to pay a rebate to customers based on their level of business and it is looking to find ways to grow.
The bank, which is owned by its 127,000 customers, spent two years and about $2 million applying for banking registration and testing its new branding.
It is looking to personal insurance and small-business banking to grow its market share.
Chairman Sir David Gascoigne says becoming a bank clarifies the 83-year-old co-operative's position in the market and the new name should dispel a long-held misconception that it does business only with public servants.
Sir David says the bank has less than 1% market share and growth will probably come from customers moving from Australian-owned banks.