The whole problem with PayPal is exactly that it isn't a bank so they can get away with all kinds of stuff a bank cannot. I doubt a bank backed competitor could survive against a business that can just lock an account with money in it and never pay them back. Not really a level playing field.
It's really hard to identify sarcasm on the internet.
in the EU (instant) IBANs (that are slowly rolling out since some years ago) largely solve the problem. here PayPal is used a lot but mostly with external credit cards (like Google pay or apple pay)