Yes it does bank around the inner rail. However, the inner rail does not go in a straight line, it moves inwards slightly along a horizontal plane in order to compensate for the rail moving upwards.
The red shows the inner rail, and how it moves in, and the purple the outer rail, and how it moves up. both lines are straight lines. It does the exact same thing on the dragon. There are some cases where only the outside rail moves to bank it, but the standard arrow transition depicted above technically has a form of heartlining, most likely accidentally. But this is not ALWAYS the case. So nobody is really wrong or right here. All in favor say aye!