There's a view a merger by Heartland and TSB won't hand the big four banks a massive blow. 

Heartland Bank has struck a deal to buy TSB for $620 million, pending consultation and regulator approval. 

Massey University banking professor Claire Matthews says the combined bank will still be smaller than the big four, and Kiwibank. 

She says a lot of work's still needed to increase competition.

"It's not necessarily going to open up a huge access to capital, which is what's really needed for them to grow, and to become truly competitive." 

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