It is unknown what competition between banks and cryptocurrencies will be after the widespread introduction of CBDC. It is unlikely that we will see the closure of banks in the next few years. Most likely, centralized finance and decentralized finance will develop and exist in parallel. Even if there is a direct threat to the banking system, governments are more likely to start restrictions for cryptocurrency than to destroy banking institutions. This is not beneficial to big capitals, and of course, no one will give full power to decentralized finance, where there is no state control. Therefore, replacing banks with DeFi is more of a fantasy.
So far it has not been possible to replace Banks with DeFi, even I personally am not sure it will happen in the near future, many rules are related to restrictions on crypto, if conventional banks start to be threatened by the presence of crypto in general, and certainly all countries will protect banks over DeFi
DeFi or decentralized finance can threaten the world of traditional banking, because of the shift in lending, even DeFi itself is known to be able to provide loans like other traditional banks.
This can affect existing traditional banks, because there will be competition between traditional banks and crypto in general, regardless of the various problems that will occur, crypto and traditional banks must be able to adapt to each other.
Crypto development is progressing so rapidly, this can be seen from the many users who join here, if Traditional Banks close themselves it is not impossible to be abandoned in the next few years.
Although currently crypto is still very risky, it is not impossible that in the future crypto can change finances, just need to wait for regulations or legal regulations, if this happens, it is certain that crypto will grow and be accepted by many people.
Well, as long as the government never cooperate and always see crypto as a competitor to fiat, traditional banks will never allow to accept crypto or integrate crypto into their transactions. However, if crypto will be legally adopted and accepted in the future, traditional banks will never stop their operation but they will continue to serve their customers and assist them in which type of payment they are convenient to make, be it crypto or in fiat.
This is more rational, traditional and crypto banks must be able to run simultaneously, in fact this can keep the bank in accordance with its function, the development of the times cannot be covered by something with existing rules, so that new existing programs (DeFi) will grow by itself, but if the two can coexist and have clear rules and regulations, then there will never be one of them will be left out