I'd assume that they've decided that annoying the handful of people that'll have such apps installed legitimately is worth it for the number of instances where such software is installed illegitimately.
Also they no doubt use your originating address and such like to add to the wealth of thigns that the anti fraud systems check (such as if you buy something in London on your card one hour then the next hour you buy something in South Africa on your card and they block your card.) I'd assume having multiple exit geographically different access addresses would kick off similar caution from the bank.
As to rooted (as in new os installed) systems while you may trust them there's little guarantee that the image hasn't been compromised by someone along the way and while if a network or manufacturer OS has a breach in their supply chain you are covered by multiple insurances the third party OS almost certainly doesn't give you any legal protection. As such a bank probably wouldn't reimburse you if they have cause to suspect that the issue was caused by you installing a third party OS.
Biting the hand that feeds IT
