How would it be possible that if my password was
123abc that my bank also accepts something like
Isn't that an extreme security flaw? If the password was hashed and salted, wouldn't the latter create a completely different digest?
This does not mean that your bank is storing your passwords in a plaintext format. The bank could simply be truncating the input password to a certain length before hashing it.
It is a security flaw as there is no good reason to artificially limit the length of passwords, but it might not be as bad storing passwords in plaintext. I would write to them and demand an explanation of why they are doing this.