Port Fairy will lose its Sackville Street ANZ Bank branch on August 25.

It comes as Mortlake prepares to close its Dunlop Street branch on Thursday.

ANZ district manager Mark Genua said there had been a significant shift in customers doing their banking online in recent years.

"Last year alone 70 per cent of our customers preferred digital banking options. People are not using branches like they used to," he said.

"At the same time, we were only completing about one transaction per customer per month through our branches. This follows a longer term trend that saw in-branch transactions drop on average about 50 per cent over the past four years."

Mr Genua said ANZ recognised the transition would be more challenging for some customers, particularly in certain rural or remote locations.

"We are personally writing to our Port Fairy customers to let them know we have provided a closure period of about six months to allow time for us to work with them on alternative banking methods, including online banking, mobile lenders and mobile banking," he said.

"They can also visit our Warrnambool branch."

But Port Fairy resident and former Victorian Premier Denis Napthine said ANZ was misreading the local economy.

"This is disappointing to say the least, and a poor decision from ANZ bank in a business sense," Mr Napthine said.

"Port Fairy is a town with good, positive economic prospects now and into the future. House prices are booming and there's a significant retirement community with investments that the bank should be looking after."

Mr Napthine said he believed having a banking presence in Port Fairy would be "very positive now and into the future".

"I think ANZ is misreading the local economy and I think there will be a number of people who are long-time customers in Port Fairy who will now reconsider who they bank with," he said.

"I think the big banks say more and more banking is now done through the internet but Port Fairy is an older community with a lot of people who prefer that face-to-face interaction.

"This is a very active tourist and business area that deals in a lot of cash and where banking services are really important. It's an area where people with business and investment interests like to have that face-to-face involvement with their local bank in making important decisions."

Mr Napthine said it was a "stupid decision" to close the branch.

"This will hurt not only the ANZ but also the local community," he said.

"This is a strong, growing economy. I think people will now be looking elsewhere to bank."

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