Phone keypad does not work during calls, e.g. for telephone banking - SOLVED

Peter Lankashire's fix from Apr 2024 below worked for my iPhone 16--only minor change is in iOS 18.0.1, the "Phone" settings are now hidden under "Apps" in the "Settings" menu. So my suggested change to this fix is as follows:

Some telephone banking and other automated systems such as for two-factor identification call you and may ask you to press a key, e.g. star. You open the Phone app and select the keypad at the bottom. You press the key. Nothing happens. The automated call system continues; it may ask you to press a key again.

By default the iPhone does not send the keypress. To fix it do this:

1. Open Settings.
2. Scroll down to Apps.
3. Scroll down to Phone.
4. Select Incoming Calls.
5. Change the option from Banner to Full Screen.

Done.