What impact does this have on security?
Your passwords are at worst 89% of the strength they would be if you had to press enter first. Here's how I calculated it. Suppose your password can be either 1-3 digits long, and also suppose an attacker does not know the length of your password. There are 1000 total combinations (0-999). Suppose your password is 7. 111 out of 1000 passwords will pass that test. (One single digit + 10 2 digits + 100 3 digits.) In the worst case that's (1-0.111) = 89% as strong as forcing someone to press enter. If your password is 71, 11 out of 1000 will pass it (99% as strong), and if your password is 711, 1 out of 1000 will pass it (100% as strong). The more digits you add, the further away from 89% you get, and the closer to 100% you get. So, effectively, we could say the security impact of this feature is minimal. The time saved by you in the long run of not having to press enter is probably worth it.
Is it much less secure and what is the minimum length of PIN should be?
If you choose a pin length of one more than you would normally choose, you are almost at the same level of security.
I'm concerned now that I'm starting to use my phone for banking.
I'm not sure how this is relevant. You should still be using a different password for banking. If you handed your unlocked phone to an attacker, your banking information should still be safe. If that's not true, perhaps because you have passwords remembered by banking sites or apps, then you may want to consider changing that. You cannot guarantee that your phone will be locked when an attacker takes it. (Like if someone running down the street rips it out of your hand.)