Honestly what's the point of 3-of-5 multisig with only 1 key, you can do nothing and it's the same as having read only wallet, you're a passive observer.
Since you're putting your bitcoin as a collateral to borrow money it's not really wrong to let them get control over your Bitcoin, but wouldn't it be more simpler to let the bitcoin in their custody and let them tell you the address because it would achieve basically the same thing?
Sounds like buzzword to me unless other keys holder are from independent companies not in cahoot and serve as countermeasure against insider job but they decided not to be transparent about it, so you could never know.
If they are going to create 5 keys, 3 will be needed to spend the coins and give one to the customer, then it's pointless because they are going to secretly control 4 from that 5 and with him or without him the banks will be able to spend the Bitcoin. The advantage of multisig here is defeated but it's understandable since the banks are very know to be centralized financially institution, they put their first before they consider an outsider, they make sure nothing harm their business.
It's left to the lenders that want to use Bitcoin to borrow money from the banks. I don't think this is useful and has any advantages but I just feel there are people out there that will use this service with or without the keys to them. After all, we use banks for non crypto transactions right and it doesn't disrupt our Bitcoin. This might just be another angle of adoption, just that I don't trust banks enough.
