Theoretically Cypto's can't be produced from thin air like fiat currencies can, so "fractional reserve banking" isn't possible.
It is possible. Issue IOU in the form of colored coins. That is the very basis of banking!
Aren't Cyptp-currencies supposed to be about not needing centralised banks anymore?
Yes it is, but who is to stop anyone from attempting to centralize? That is the price for decentralization. You get freedom of will to do anything you want to do. Whether people will support is another story. As it is now, 7 B people support centralization while a miserable 2 million don't. It appears based on the very premise of 51% consensus, the name of the game for decentralized consensus, decentralization appears to be a great ideal at this point in time.
What could this proposed Bank do that a individual NEM client couldn't?
I believe they are two different classes. One is a service provider and the other is a user. Not sure what you mean here.
Here's Fidor's published strategy statement:
We are a rule-setting, agnostic service leader audited by a federal regulation providing a banking home for the providers and clients of cryptocurrency related services.
"Agnostic service leader"?
Who's "federal" regulating body?
They claim they want to deal with cryptos, doesn't matter whether it is Bitcoin or shitcoin. That will be left to be seen.
Federal regulating body - They are based in Germany. So, it is Germany, I guess.