Because banks and financial institutions benefit from the short-term float by investing the cash before settlement …?
There’s also some risk management aspects, but they’re probably mostly historical and T+1 is probably technically feasable (pure guessing on my behalf here, I don’t understand the FX exchange mechanisms under the hood as well as for equity or bond trading).
Not sure what you mean here. Settlement is x business days (T+x) after the order has been placed. Your broker UI might say that equity has been bought or that cash has arrived, but it has not and the security or cash won’t be on “your” book until the settlement date.
See this post for a short summary of the mechanics of equity or bonds being traded.