5. You're no difference from someone using a bank because everything you do under a centralized exchange is from a central authority like the banks and other centralized institutionizations did.
Banks are better because they are likely to protect your fiat than exchanges will protect your coins. There can be robbery in your bank, you can go to another branch the next day to deposit or withdraw, you can make use of their online banking, this is the way banks operate in my country, but if an exchange is hacked, your coins are gone or inconveniences may occur.
That is a worst thing if you trust exchanges that will never guarantee full security over your coins. Once they are hacked, your coins will be gone forever. However, banks are still good these days but if you aim for bigger returns that will never happen. So its still best to have your own non-custodial wallet, at least you take the full management of your own coins and they will never be a target of stealing as long as the owner is responsible to protect his own coins.