That is the con yes but as @yunkzilla has said banks are using it and not that many at the moment give it 4-5 years I'm sure you will see this number explode doesn't mean the price will directly correlate as they will use normal currency for trade on a private block chain with the token only being used when no other finance is available.
It can work directly with banks on a multi currency shared api for direct transfer what's not to like has first mover advantage
No. If banks see that it is cheaper for them to use than fiat, they will not use normal currency (known as "fiat") because it will make their PROFIT bottom line bigger... of course they will continue to charge you and me the same fees for sending money back and forth... but you and me will perhaps be smart enough not to send money through banks anymore.
They can use it in conjunction with fiat the ripple payment system is made to work with the banks they don't have to chose XRP unless they don't trust the other party or if that is the only means of funding. By virtue of them using the system they will need to stake 20XRP per account and will probably hoard more just so as not to suffer price volatility.