Brock has been with Kiwibank since its establishment by the previous government in 2002, and is currently general manager of savings and transactions.
Knowles announced he was leaving in May.
Kiwibank chairman Jim Bolger said Brock had been chosen from a field of high quality national and international applicants.
"Paul has played a key part in Kiwibank's success since its creation and has the skill and leadership which will help the bank go from strength to strength and help continue to change the shape of banking in New Zealand," Bolger said.
"It is a tribute to the development of the senior management under Sam Knowles that the Board of Kiwibank was able with confidence to appoint a top quality internal candidate to drive the next phase of the bank's growth," he said.
Brock will move into the role with Knowles in support until the end of this month
