Yes, they are really scared of what it is turning out to be. Judging by a video I watched recently, our central bank have already set up a committee to look into the applications of the blockchain and Cryptocurrency in itself and how it can be adopted for use. A friend also told me that he fears for the people working in banks at the moment with things are going, guys might soon be running out of bank jobs soon. I guess the earlier the better they start the adoption so as to carry everyone along.
Yes i also think so that there will be a little confusion for the banks, Although fiat will continue to exist for a long long time may be for decades but still i think that with the increasing number of bitcoin uses they will surely give preference to bitcoin and online wallet as compare to banks, so in future they may be worrying about the situation. Because people will reduce the use of banks.