Electronic money transfers between banks will be finalised within one minute from next year.
New banking technology means customers will be able to transfer money between two separate financial institutions in real time.
New Payments Platform chief executive Adrian Lovney said the initiative was set up by Australian banks to build the system.
Mr Lovney said funds would appear in the recipient's bank account in as little as 30 seconds.
"We're putting in place a new system which will sit alongside the old system which will make payments move instantly between bank accounts and that'll happen 24-7, 365 [days]," he said.
The New Payment Platform system acts like a secure network between two separate banks such as National Australia Bank and Commonwealth Bank.
Mr Lovney said the new technology would allow messages to be sent in real time, allowing funds to be sent instantly.
"The system that we're using today is about 50 years old and it was designed around the principle of tape exchanges, and transactions were stored until a certain time and then physically those transactions moved in a batch to the receiver's bank," he told SBS World News.
