Xinja is the latest Australian neobank to obtain its restricted banking licence from the Australian Prudential Regulation Authority (APRA).

APRA today announced it has granted Xinja a restricted authorised deposit-taking institution licence (RADI). Introduced in May this year, the new category of licence means Xinja can call itself a bank and hold up to $2 million in deposits of less than $250,000 each.

The company said hopes to invite people to open an account in Q2 2019, but the exact timing will depend on the regulator.

Xinja will now also have to follow APRA’s rules around its tier one capital, assets and liabilities, and the assets it holds on its balance sheet.

Digital bank Volt was granted an RADI in May and the two new banks represent a new kind of competitor for incumbent financial institutions. Designed for mobile and without any bricks and mortar branches, the insurgents are hoping to lure customers away from big banks.

Xinja Chair Lindley Edwards said “old-style banking is about to face serious challenges”.

“Xinja will bring greater competition to the market, which has been stagnant for too long when it comes to looking after the interests of ordinary Australians. We have built Xinja from the ground up, which means we have listened to people who want to bank with us, and used their feedback to help us build a better bank,” she said.

More than 22,000 people have already signed up for Xinja, which has an app and prepaid card that also serves as a “no-fee travel card” in use in more than 70 countries. Xinja also has an Australian Credit Licence, which allows it to offer home loans to a limited number of friends and family. The bank is hoping to roll out home loans to the public in 2019.

In November Xinja announced it had completed a rapid three-month implementation of SAP for Banking, which underpins its core banking system.

To date, Xinja has raised over $A17 million in series A and series B capital raisings, including $2.7 million from 1,200 retail investors in Australia’s first and equity crowdfund.

It has announced it will launch a second equity crowdfunding in January 2019, with a target range of $A10 million to $20 million.

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