Kenney also noted that the line between what is and is not a bank is blurring, confusing the issue for many customers. Many of these fintech companies, he said, act like banks and take deposits, but they have no actual banking charter or license and instead work through a third-party bank, or even place deposits into a money market fund, "so it's not even protected." 

"But people don't understand that concept, so understanding what a bank actually is is becoming even more challenging, because things like Facebook and Google and other entities with billion-dollar budgets can create something on the fly and say, 'Here's our own version. ... You can make deposits with this, and we can give you a credit card and a mobile banking experience, but they never use the word 'bank.'" he said. 

One group that does understand the difference, however, is the regulators. Kenney said, however, that compliance can be a challenge because the actual rules were written with traditional banks in mind. Regulators, for example, will ask about what armored car fintech firms use, but that point's moot since they don't use cash. He also noted that there are questions of how people can audit his bank, and how to do the audit trails necessary to prove that the bank did the right thing when it originated a loan. 
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Charles Abraham, the financial services practice leader at Mazars USA, noted that the blurring of the lines between bank and nonbank fintech, as well as the overall digitization of the financial sector in general, raise some ethical questions as well. He referenced the recent controversy regarding gender discrimination with the Goldman Sachs-backed Apple card, where a man was given 20 times the credit limit as his wife despite her having the better credit score. The response from Apple was that this was just what the algorithm decided. 

"And that's not sufficient. You need to have a better explanation for how these decisions get made," he said. "In the next two years, I think we'll see more circumstances like this, where it's quicker [to have an automated algorithm] but sometimes we're not as comfortable with the impact." 

He also noted that, since banks process huge amounts of data, this shift raises further questions about data integrity and security. He pointed out how Google recently partnered with medical records firm Ascension to put health care data in its cloud server without informing doctors or their patients, and yet despite the controversy it appears so far to be legal right now. 

"So that's where regulations will play some catch up, but at the same time we hope it won't crush innovation. It will be messy. It always is," he said. 

Kenney said a bank he used to work at faced a similar issue. The privately held bank was exploring how it could use proximity data from its customers to offer products. One particular application was to see if people were on a car lot, and if they were, offer them a discount loan "if they took it there on the spot because they know they're on a car lot and we can offer that on a banking app." 

"But that would annoy the hell out of me, and I'm a banker. But the data is there, and you have to figure out how to use it and monetize it," he said.