You're basically creating a mini shower tray half way up the wall, inside a timber structure. It's asking a lot of the various seals that are being required to defy gravity and physics.
These days they don't put soap bars there, they fill them with all sorts of pumped liquid bottles that claim to do different things.
I have a niche in my shower, it has my shampoo, body wash, the wifes, the daughters - we all prefer our own.
Pre-formed would be fine, that would deal with all the waterproofing issues.
Just as long as it's proud of the surface as shown above, not recessed in with tiles over its faces - then you have a joint that's just asking to become a new drain.
Having said that, its top edge is a potential leak and/or slime trap.
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