I think that the "bitcoin bank" name is misleading. In my head (and others' too) Bitcoin bank would be a "bank" where you "deposit" Bitcoin and get interest. Of course, such thing could not be great and it's not what you ask for.
So a better name could be "Bitcoin friendly bank" although there are already a couple of banks or banking services that are not that "cold" towards Bitcoin, allowing withdraw from exchanges and also offering services to buy Bitcoin for you.
I guess that you know all this. What I want to say is that we already have a few "friends" and the banks overall seem to get more friendly towards Bitcoin with every new day passing. So a bank offering full services, from exchange (or work with an exchange) to cards and such is just a not-so-far step. Incorporating Bitcoin capabilities into their ATMs is also a not so difficult next step. We are close to that, your 10 years number may be already big.
The question about the demand is, however, a very good one. Banks usually operate with high fees. So although more convenient, buying/selling Bitcoin though a bank will be more expensive (in the same way converting EUR/USD/local currency is much cheaper at an exchange office than at the bank). There will be demand for it, but I don't think it will be that big. Of course, it will add legitimacy, which will translate into increasing demand.
Yes you are right! How people dream about bitcoin bank is altogether fake. It's very much against the basic principles of BTC as how would banks give an interest on BTC which is a deflationary currency and cannot be further used to make profits. Moreover, providing loans in form of BTC to an address where borrower holds the private key is also very risky as he at his own option can do anything with the funds and opt not to return. Without any legal remedies available recovering the debt would be pretty hard. So even if we want BTC to operate as a secondary currency we can think of Banks legitimately allowing crypto withdrawals and selling directly through ATM. This can be possible through direct tie-ups with exchanges As banks can assist them in the process of selling cryptocurrencies and making people available cash at counter.
Having said all this. Without governments agreeing to bring Cryptos in central system It is basically nothing but a dream as no Bank would be happily involved in it because almost every institution in every country has to register itself under some central authority to call itself a
Bank and these authorities put constraints on banks to control the flow of money & hold some typical type of assets. When more and more people will ask for crypto withdrawals Bank has to render them withdrawals and getting cryptocurrencies in return. Even if think that depository services are also open still it will be too difficult to create an equilibrium so that deposits are roughly around withdrawals so banks don't have to hold a lot of cryptocurrencies. So without governments support Things will be too complicated to even dream for.
