Earlier quoted context omitted.
More likely it is to prevent your having to say your password to the person on the phone. This protects you from a malicious bank employee.
Right, but my point is the backend to make this work must be terribly insecure. I just did some reading, and apparently they take your password and just store the keypad equivalent (or more likely, a hash thereof). So you can login in to the website with your original password, the keypad mapping of that password, or any text password that maps to the same keypad digit mapping, and they all work.
That's… not exactly more likely. These are commonly systems predating the internet, from a time when connected networks were trade-specific and Very Expensive, storage security was a lesser concern (and CPU-expensive) when the system could only be accessed on dedicated lines only accessible to employees.