Commonwealth Bank customers will be the first in Australia able to withdraw cash from ATMs without a card.
From May, they'll be able to use the Commonwealth Bank app on their Apple iOS or Android smartphone to withdraw up to $200 per day.
Using the apps, customers can request the amount they wish to withdraw, and then input two number codes - one from the app and one received in a text message - to withdraw money.
Withdrawals are limited to a single daily transaction from compatible CommBank ATMs, more than 3000 of which are undergoing software upgrades.
The functionality will also allow customers to designate another person to withdraw the cash by having the bank send the codes to the second person's phone.
The announcement comes amid warnings from NSW Police about an increase in ATM "card-skimming" in Sydney, with criminals using gadgets to steal users' card and PIN details at terminals.
By eliminating the need for a card, the new functionality would help combat such crimes, Angus Sullivan, the bank's head of cards and payments, told reporters in Sydney.
The bank also announced a new mobile banking feature that will enable credit card users to set limits on how their card is used.
Customers will be able to deactivate in-store and online international transactions, block ATM transactions, and set transaction limits with the swipe of a button.
The bank said its smartphone app had reached more than two million registered users since launching in late 2013.
Sullivan said there were no immediate plans to introduce contactless card withdrawals at Commonwealth Bank ATMs.
Westpac, meanwhile, announced plans on Wednesday to offer its own card-free ATM withdrawals from July.
But rather than transacting via a smartphone, customers will need to dial the bank's call centre to obtain a six-digit code they can then key into a Westpac ATM.
They'll be able to make up to three transactions per day up to a value of $1000, with a $2000 weekly limit.
The bank plans to extend the functionality to Westpac's mobile banking app after July.
