The Australian Prudential Regulation Authority (APRA) has granted Xinja Bank a full banking licence.
The effect of the licence means that Xinja can now open bank accounts to its early customers.
Xinja chief executive and founder Eric Wilson says the company can now commit to disrupting the ageing bank sector in Australia.
"It's enormously exciting that Australians have a new, independent bank," says Wilson.
"It's time Australia's very old banking model was disrupted. We are 100 per cent digital and we want people to have a real alternative to the incumbent banks. We want to give customers a real choice to be able to be with a bank that looks after them."
Xinja Bank's freshly launched transaction accounts are able to be accessed exclusively via the Xinja app and come with a Xinja Debit Mastercard.
The company will soon launch savings accounts in addition to its plans to launch lending products in the first quarter of 2020.
Since its launch in 2017 the company has been operating with products in the market like a prepaid card and its app.
The company has raised more than $5 million over two equity crowdfunding campaigns in January 2018 and January 2019. This is in addition to $45 million raised from private and institutional investors.
Since 2018 Xinja has distributed more than 12,000 prepaid cards, and over 28,000 people have already signed up for Xinja bank accounts.
The simple fact that the bank is brand new is a key advantage in itself according to founder Wilson.
"We don't have bricks and mortar branches or old technology that we are constantly patching to meet the needs of customers," says Wilson.
"Our costs will be significantly lower than traditional banks."
Wilson says the company and its 65 permanent staff have worked hard to get through the APRA licencing process.
"This has been an incredibly thorough process. We have been really busy building the best systems, to the highest standards authorities rightly set, to get our bank up and running," says Wilson.
"And we have been in constant contact with our customers and investors, many of whom have been on board since the beginning, when all we had was a solid idea about what we wanted to deliver in banking and a bunch of slides to explain it. Our customers have helped us develop, define and refine what we offer."
CEO of fellow neobank 86 400 Robert Bell has welcomed the entrance of Xinja into the fray.
"Congratulations to the team at Xinja on securing their licence. We're big believers that more choice is good news for Australians and the banking sector as a whole," says Bell.
"Thousands are already using 86 400's full transaction and saving accounts, having signed up to our early-access waitlist. We finished inviting waitlist customers last week and will be launching nationwide imminently, meaning anyone in Australia can sign up and experience our smarter approach to banking, in as little as 120 seconds."
Business News Australia
Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support