Fractional Reserve Bitcoin?

Apologies if this question is redundant, ridiculous, or an unnecessary worry.

How likely do you think there’s a future where banking institutions (Chase, BoA, etc) offer paper bitcoin to their customers, and most people not understanding the importance of self custody, end up with a fractionalized share of essentially nothing much like the banking industry is currently doing with the dollar? Does the likelihood of a spot ETF negate this concern with national/regional banks, not that a spot ETF is significantly better because it’s not, but it should* be regulated to the degree where all shares are covered 1:1 by BTC reserves. Is the concern invalid?