Would this make banks responsible for uncontrollable losses? This will be great for adoption and hints at a future where banks essentially regulate smooth digital transactions and keep them secure.
If they ever go this route, I imagine they'd offer a deposit insurance. Either way, if they offer this as a service, they should be liable for any losses. There's really no point otherwise.
But yeah, whoever thought that banks would just roll over and die once crypto makes it big is lying to themselves. They're going to be able to find ways to adapt, just like every other business that tries to survive.