The start-up is an example of one type of business Treasurer Scott Morrison is trying to encourage, through moves to make it easier to start a new bank in Australia.

Xinja, which is looking to raise $10 million to $15 million in capital next month, equal to about 30 per cent of the company, is aiming to next year launch what have been dubbed "neobanks" in the United Kingdom.

These are small banks that provide basic retail banking products such as transaction accounts and mortgages, but are designed entirely for customers who do their banking on a smart phone.

In the May budget, Mr Morrison unveiled plans to make it easier for such firms to get up and running.

The government proposed to allow all deposit-taking institutions to call themselves "banks," rather than only those with more than $50 million in capital. There are also plans for a "restricted" licensing regime for small banks starting out with as little as $3 million in capital.

Xinja chief executive Eric Wilson, a former National Australia Bank executive, said he was working on the assumption that it could meet the current rules - but the changes to the licensing regime had been well received by investors.

"I've been laughed out of many VC [venture capital] offices in the last few years saying I need $50 million to stick in a bank account and do nothing with," Mr Wilson said.

"There's definitely been a lot more interest from investors now that they know the regime is changing."

In the past decade, only one new banking licence was granted to a bank not already linked to an existing bank, a government inquiry said last year.

Xinja plans to release a debit card early next year as its first offering, followed by home loans, and deposits in the third quarter of 2018 - though that will depend on obtaining a banking licence.

Customer innovation director Van Le said it would target customers with a "digital, mobile lifestyle".

"We were wanting to solve problems for people who do everything on their mobile phones already except for their banking," Ms Le said.

Xinja currently only has eight staff but aims to raise this to 180 within three years of running.

While the major banks spend billions of dollars a year on their technology, Mr Wilson said the business could effectively hire a core banking system for about $20,000 a month, while owning systems that customers see, such as its app.

Mr Morrison last week said the government's plan would lower the barriers to new firms looking to join the banking industry, when he released a consultation paper from the Australian Prudential Regulation Authority on its new licensing regime.

"APRA's authorisation process is vital to ensuring new entrants to the banking sector can honour their financial promises and maintain Australia's financial stability and economic wellbeing. It is important, however, that the licensing process does not form an undue impediment to competition and innovation," Mr Morrison said.