Android shouldn't be considered Open Source anymore, since source code is published in batches and only part of the system is open, with more and more apps going behind the Google ecosystem itself.
Maybe it's time for a third large phone OS, whether it comes from China getting fed up with the US and Google's shenanigans (Huawei has HarmonyOS but it's not open) or some "GNU/Linux" touch version that has a serious ecosystem. Especially when more and more apps and services are "mobile-first" or "mobile-only" like banking.
Allowing apps to say "we only run on Google's officially certified unmodified Android devices" and tightly restricting which devices are certified is the part that makes changes like this deeply problematic. Without that, non-Google Android versions are on a fair playing field; if you don't like their rules, you can install Graphene or other alternatives with no downside. With Play Integrity & attestation though you're always living with the risk of being cut off from some essential app (like your bank) that suddenly becomes "Google-Android-Only".
If Play Integrity went away, I'd be much more OK with Google adding restrictions like this - opt in if you like, use alternatives if you don't, and let's see what the market actually wants.
There is even government regulator pressure now for financial services to be liable for cases where the user legitimately authorizes a transaction to a party that turns out to be a scammer. Of course the banks want to watch your every move and control your devices. They would be stupid not to given the incentives.
I guess I'm unusual in that I've been using an "online" only bank for 20 years (back then it wasn't so online... I had a stack of UPS overnight envelopes for check deposits), but I cannot imagine patronizing a bank that won't let me log in and do basically anything from a browser.