Such data should be put in (or encrypted by) the hardware-backed keystore. You get to have full access to what the OS does, including seeing what data gets passed into this secure element for encryption or signing (you retain visibility and control), and yet secrets can't be leaked to you or an attacker who tries to extract those secrets

See e.g. your bank card: it's yours, you can choose where to stick it and what transactions it authorizes, but you can't get at the token that serves as proof of possession nor reset the PIN attempts counter. Your phone('s banking app) could work in the same way and has the hardware on board that makes this possible. So you see, it's a choice that you don't get to see what apps are doing and people are scared into believing that access to their own phone is bad. It's a matter of conflicting incentives on the vendor side, not technical risk