CBA last week became the latest bank to retreat from "manufacturing" wealth products, selling its life insurance arm for $3.8 billion and saying it may spin off the investment business of Colonial First State in an initial public offering.

CBA is hanging onto its superannuation and financial advice businesses. But a float of Colonial's funds manager, if it proceeds, would mean the dismantling of most of CBA's wealth management arm, as ANZ Bank also looks to sell assets, and after National Australia Bank has sold out of life insurance.

Even so, Mr Murray said some of the strategic reasons CBA bought Colonial under his leadership in 2000 were just as relevant today, if not more so.

In particular, the boom in digital banking and the strong growth in self-managed superannuation both supported retail banks being involved in wealth management.

"I always felt that the internet would transform banking and open up the opportunity to have a deeper relationship with clients through wealth management and insurance," Mr Murray told BusinessDay.

"If anything, developments in information technology have enriched the potential service offering in these areas.

"Banks have always been in the position of looking after the management of their clients' affairs for them, I can't see why this is very different, particularly in the context of the superannuation system, including the share held by self-managed funds."

The comments highlight that even though banks are retreating from parts of the wealth management sector, they are not about to stop distributing wealth products such as insurance, superannuation, or advice.

???Even so, analysts last week welcomed CBA's move to exit the life insurance sector, which had been a drag on CBA's returns and a cause of reputational damage to the bank - an issue that is now the subject of a powerful prudential inquiry.

A Reserve Bank paper last year also concluded wealth management had fallen short of expectations for banks, producing slower growth in income, and lower return on equity, than other parts of the major banks.

CBA's exit from life insurance also comes amid recent debate about the impact for customers of bank ownership of wealth divisions - with critics saying it creates pressure to sell the banks' products.

Mr Murray's review of the financial system in 2014 defended vertical integration ownership structures - where banks own associated businesses such as insurers or advisers - but said firms needed to be more accountable for distributing and producing financial products that were appropriate for consumers.

Mr Murray also maintained that vertical integration could have benefits for consumers where it meant having more competitors in a market.

"It's actually more healthy for the whole financial system for the banks to be in these things because it means there's more competition," he said.