The Australian Treasury painted on Wednesday a robust local banking industry that has spawned profitable settings more players and therefore further inflow of investments.

Treasury senior executive Jim Murphy told a Senate Committee inquiry in Canberra on Wednesday that post the global financial crisis in 2008, Australian banks proved strong and resilient enough that federal interventions became unnecessary even in the face of difficulties that were set off by the downturns that hammered financial institutions in the United States and the eurozone.

"In my view we are not going to return to a pre-GFC model for the financial system," Mr Murphy was reported by the Australian Associated Press (AAP) as saying as he testified before the Senate panel.

The three-day inquiry aims to come up with an assessment of the country's banking sector in the aftermath of the crippling global economic turmoil that has impacted on key markets, specifically in North America and a number of European nations.

According to The Australian, the inquiry will move to Sydney on Thursday and Friday to hear the testimonies and presentations that will come from representatives of the country's so-called Big Four, namely the Australia & New Zealand Banking Group (ANZ), Commonwealth Bank of Australia (CBA), National Australia Bank (NAB) and the Westpac Group.

The Reserve Bank of Australia (RBA) is also slated to appear before the Senate panel, media reports said.

Coming from the challenges posed by the GFC experience, Mr Murphy told the senators today that Australia proudly hosts a banking sector that promises considerable returns for new players.

To date, at least 115 lenders are currently in the market which in turn has so far produced wide array of mortgage products that the Treasury tracked at around 30,000 by the last count, Mr Murphy said.

Another Treasury official, Ian Beckett, informed the inquiry panel that the reform initiatives introduced in the industry by Treasurer Wayne Swan on 2010, was more than successful in bringing in more loan applications to small players.

The swing, Mr Beckett said, resulted to more than $16 billion of less business for the giant banks, which in turn were shifted to the larger picture that benefitted more banks outside of the industry's four pillars.

He credited the reform suite, which banned banking exit fees and hastened the process of switching banking providers among others, as key to the realisation of what is now perceived as more level playing field in the sector.

Also, Mr Murphy noted that the Big Four were not entirely 'marginalised' by the federal government's reform measures in the industry and in fact they would have more room to operate on achieving growth.

This is made possible by greater access to wholesale financing markets, which were core requirements by banks to conduct their businesses more efficiently and reach their growth targets, he added.

Yet the earlier hope of establishing a fifth pillar in the industry, Mr Murphy said, as the main actors touted the role - the credit unions and building societies - were still far from assuming a solid position due to the "fractured state ... of the securitisation markets," which basically are lifeline of these institutions.

Notwithstanding the challenges, present and ahead, the Treasury is convinced that the local banking industry or the financial system as a whole "is strong and resilient."

"We are actually repositioning ... the Australian banking system is in a period of transition right now that is happening internationally," Mr Murphy further explained.

The main indicator for such phase, the Treasury official added, is the banks' foremost aim of achieving financial stability and their intent to get in line with the rigid regulatory requirements as outlined in the Basel rules on risk management, which was designed to mitigate unnecessary financial losses.