Custodial services will be replaced my services that run on code and that are decentralized. If innovation continues, that's the way things are headed. Decentralized exchanges have already taken a big chunk from custodial exchanges, decentralized lending has begun to disrupt traditional lending. Within 20 years (maybe soon) custody will be replaced by code.
Education will also get better, so doing things yourself will only get easier over time as well.
Not to mention how many times per year we are reminded that custody services lead to loss.
It might sound unrealistic though so did the concept of Bitcoin 20 years ago I'm sure. I am very confident in my statement.
I hope you're right, but I'm sorry it's unrealistic, because governments won't allow this in the long run. Even if services based on code and decentralization become widespread, as you say, governments will force them to enforce KYC and AML regulations.
Governments will not allow services that allow users to circumvent these regulations, and even if they do exist, they will pursue and shut them down, as has happened with many mixing and privacy-preserving services that relied on code and decentralization.