Banks do not fear Bitcoin but fear the technology that runs it.
Bitcoin is supposed to work like a payment system but is too slow to compete with the Banking payment system. It is now considered more as an asset/commodity than a payment system. Assets/commodities are controlled and owned by Banks, If regulation comes into existence than the Banks will be able to control and own Bitcoin as they did for Gold.
So my friend, Banks never feared Bitcoin but, we as a community do fear Banks.
Central Banks don't even fear cryptography. It's something they want to use as well to separate and alleviate control by federal/government institutions. Banks are under heavy pressure from serious fines (into the millions) when it comes to regulations and fees they would incur from breaking a current infrastructure contract. I had a discussion with Alex, he was a Bulgarian and worked as a Risk Management executive and we had a nice chat for a few days at the bitcoin superconference. So that's about all I have to share on that specific subject.
You also have people like Blythe Masters who I mentioned previously in this thread, she was a former JPMorgan exec and went on to become CEO of Digital Asset Holdings which you can easily gather some quick information on to get an idea of what they're about.
Essentially, banks want to implement blockchain technology into the infrastructure, the technology isn't up to speed at the moment. I correlate a contributing factor being too much focus is on the coins and trading (mainly bitcoin) but basically all of them are an issue. Additionally the block size being an issue, and algorithms used. Central banks are needing hundreds of thousands of trust contracts per second to compete with the current digital banking infrastructure.