Westpac chief executive Brian Hartzer believes banks are facing a period of subdued demand for credit and pressure on margins. In response he is taking the bank digital.Hartzer aims to cut costs (A$400 million is the target this year) and improve customer service with the introduction of a range of digitised services, fintech applications and artificial intelligence.When the bank announced last month that it was getting out of the personal financial advice business, Hartzer said it was looking at robo-advice as an alternative.Yesterday, as he ran through the details of the bank's half-year financial report, he announced the launch of Red - a "chat-bot" based on IBM Watson artificial intelligence. The system has been in a trial since late year and is now available on the mobile app.It has introduced a digital mortgage application process for Bank of Melbourne, BankSA and St George Bank.It is extending the use of electronic conveyancing and electronic signatures. Greater use of electronic services has allowed it to take a lot of cash out of its network and reduce branch numbers. Cash turnover in branches was down $700 million during the half.The bank reduced its full-time equivalent numbers by 800 during the half. Westpac chief financial officer Peter King said the number would have been closer to 1200 but the bank had to put on staff to manage its remediation program.Hartzer makes no secret of the bank's aim to reduce its physical presence. It closed 40 branches and removed 346 ATMs during the half.He is keen to do more in this area. "We need to move faster" he said."We want deeper relationships and better retention without relying on price. We have grown customer numbers this year and we will be relying more on digital offering to serve them."Of its 9.5 million consumer banking customers, the bank counts 4.4 million as "active digital customers".It has increased its funding of fintech investor Reinventure to $150 million.