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.
What are you talking about, it would essentially be a shapeshift style thing where you enter the amount of use it buys that much off an exchange and sends it to the address you entered. Totally possible.
I'm talking about loans, credit cards etc., it wouldn't be profitable for banks to offer bitcoin loans, look at payday loans - banks would have to make their fees that high in case of bitcoin loans because they wouldn't be able to just write off unpaid loan just like they do (to some extent) with fiat loans.
If there's money to be made then there's nothing stopping them getting involved (aside from maybe regulations), but there obviously is money to be made from bitcoin, but it's probably too risky for them right now with fluctuations etc and would be akin to them dealing with stocks. I don't think they'll ever be giving out loans or mortgages in bitcoin but they could certainly make money from fees or interest, but I think they'll be staying well away from bitcoin for the foreseeable future. If bitcoin grows in popularity by tenfold then maybe they'll get involved but I doubt it.
Id like to answer with a question. If bitcoin were to be adopted as a currency? Will banks still be needed?
Yes. Some form of bank will always be needed. Where will people get their mortgages or loans from?