This is a good question and we should always be asking "Why Bitcoin?" and think about the trade-offs.

For small amounts of bitcoin a trusted third party, especially an institutional trusted third party, makes a lot of sense. Convenience, availability and low transaction fees dominate the user's needs.

For large amounts of bitcoin, you probably don't want to use a trusted third party and you can afford to run your own infrastructure. For instance a national bank should not keep all its bitcoin on coinbase.

Bitcoin allows you to choose between these two trust models. It is very hard to remove a trusted party from a system which fundamentally relies on a trusted party. However it is often easy to inject a trusted party into a system to make it more useable or scalable. Thus, for maximum flexibility you want your base layer to be as trustless as possible and then add trust as needed to solve different use cases.