The solution that has actually been implemented in Europe is to regulate the payment providers, so inter-bank transfers are effectively free and instant, and credit card fees are capped at 0.3% (i.e. 10x less than in the USA).
Crypto takes a different approach: a single protocol that is shared across all countries.
Banks have the privilege of being legally required for any transaction greater than 10k euros or such. Therefore it is only fair that they must ensure cheap service.
Ultimately, as someone who finds blockchain technology really cool, what I struggle with is, in which scenarios is blockchain better than Postgres?
Different developers are comfortable building inside a shared execution environment. If Western Union built a smart contract execution system, you'd have a much, much harder time convincing developers to build inside of it than you would on Ethereum. It would be much less likely that Ethereum would shut off, change the rules, ban you from the platform, etc.
The advantage that gives blockchains is composability. Thousands of different applications can instantly talk to one another using standardized calls inside atomic transactions. Databases by contrast are siloed. So they work really well if you stay within the application that database was built for. But really poorly once you try to cross applications, and hence databases. Imagine how hard it would be and how many hoops you would have to jump through to be able to use Venmo to buy Nasdaq listed stocks. In contrast USDC and Uniswap work together seamlessly because they're both built on the same common credibly neutral layer, Ethereum.