You are spot on with this; you don't need distributed systems and cryptography to run a fraudulent bank! Indeed, much of the 'trust' that comes with traditional financial institutions comes not from an inherent advantage in competence compared to cryptocurrency developers, but the fact that most national governments will bail out bank failures and reimburse vast sums of their citizens' losses.

If cryptocurrency-based financial instruments were regulated and protected to the same degree as traditional companies - but with the relevent technical competence to match! - I'm sure 'pay with ETH' and the like would be as common as PayPal and VISA.