They're using Strike, which has no fees, nearly instant transfers, can send globally (again for free) and only need a name and phone number. Isn't that better than a bank aside from clawbacks?
El Salvador picked BTC because of it's popularity, the problem is BTC is a terrible currency to actually use for something like this because of slow transaction speeds and high fees, so to get around that they augment it with Stike, which takes the decentralization out of the transactions, which makes the whole thing moot in my mind.
Also, I assume that users will have the option to move funds from Strike into a hardware wallet (or similar) of their choosing. Either way, if El Salvadorans get in on the ground of floor of the state adoption phase of bitcoin, they are gonna make bank.
The biggest problem to me is that it is REALLY hard to understand the lightning network. I have tried most of the lightning wallet apps[1] and they are not very clear about where your keys are, how channels are managed, and what tradeoffs have been made. I am optimistic the infrastructure and technology will get there quickly. I think the lightning network will be kind of like email. Decentralized but most people use a few big players. I have been able to bounce back and forth tiny payments (less than a dollar worth) between most of these wallets in seconds. It's pretty amazing.
[1] Muun, Phoenix, Wallet of Satoshi, BlueWallet, Breez, Lightning Labs (beta, no longer available)