The entrance of new neobank lenders in the Australian marketplace took another step forward yesterday.

Banking regulator APRA granted neobank startup Xinja licenced status as an authorised deposit-taking institution (ADI) without restrictions under the Banking Act.

Xinja was previously operating with a restricted licence, which capped the amount of deposits it could hold at $2m.

It now joins 86400 and Volt Bank — two other startup lenders serving the retail market — and SME lender Judo Bank with unrestricted licences.

And it’s the result of a change in regulatory policy first enacted two years ago, when the federal government handed down its budget and asked APRA to open the doors to new market entrants.

Pitched at customers aged between 25 and 45, Xinja is a full digital bank that offers transaction accounts via its app and will now launch savings accounts. Overdraft lending products are also slated for early 2020.

The company has now raised $45m from sophisticated and institutional investors to finance growth.

And it was also one of the first success stories for equity crowdfunding in Australia, having raised around $5m across two funding campaigns on the Equitise platform.

The company has just kicked off a Series D funding round looking for a further $50m, and co-founder Eric Wilson says the company plans to tap investors for a total of around $150m over the next few years.

Once it starts lending money, Xinja plans to finance a competitive loan offering with a mix of deposits and wholesale funding.

Founded in May 2017, Xinja says it has around 28,000 people signed up to its platform — still a drop in the ocean compared to the customer base of the major banks.

And while deposits and transaction services will form a core part of the product offering, large profits aren’t realised until a bank starts issuing loans.

But like its other neobank competitors, the company points to its digital footprint as a key cost advantage against the traditional lenders, which still have to run and manage their legacy branch network.

The influx of new entrants follows a notable shift in the UK market, where digital banks such as Monzo, Starling and Revolut have gained traction.