If the in-app browser was just a window into actual Chrome/Safai (i.e. it's a real tab when you open Chrome/Safari and has your logins bookmarks, etc.) and you could "pull" the window into the foreground as a slick transition to the browser app then it would be fine, but as it's implemented it's mostly just annoying for everything but oauth flows.
I think the problem isn’t in the WebView model - It’s probably that you have to use the browser to do something useful that WebViews can’t.
When plaids infrastructure gets popped the fallout is going to be incredible. Hundreds of thousands of bank logins, ripe for the picking.
I'm not sure what type of threat model they have, but I don't see how this increases security at all. If the app is malicious, there's nothing preventing them from faking the CCT interface, or omitting it all together. It's not like users would be suspicious if they were asked for credentials outside of a chrome custom tab.
Ironically, Plaid is doing the same thing. Their login screen[1] is designed to look like you're logging into your bank, even though your passwords are sent in plain text to plaid.
[1] https://plaid.com/demo/?countryCode=US&language=en&product=t...