Banks can't work with bitcoin, search "fractional reserve". Banks may offer some Bitcoin services in future but it won't replace fiat services nor it will be possible to seamlessly juggle/ exchange between bitcoin and fiat.
I think so, bitcoin can't work directly with the banks. Paypal is a fiat money while bitcoin is not, and I think investors don't want that things to happen simply because bitcoin is a decentralized currency. Exchanges should improve more, and have a function that you can transfer USD directly to your bank accounts, but if cryptos to your bank accounts I think its not possible yet but who knows in the future, Banks may continue to support cryptocurrency or they will not allow this market to grow easily.