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.
Traditional banks are always against with the cryptocurrencies financial system but if in the future the government will consider cryptos as a reserved currency, then we can expect for traditional banks to cooperate with crypto. In the end, centralized banks are only following the laws mandated by the government. If they will oppose, they will be subject for closure in the future.
I also think that governments and banks at some point will accept bitcoin as they will not have any other option, however that is when the real game will begin, governments will start to use bitcoin as a reserve currency and it would not surprise me if they began using it to back their currencies as well, but that means that whatever bitcoin they get will never go back in circulation ever again and then they will try to impose their fiat once again, only then we will know how resistant this market really is as we will have to face such a huge pressure coming from them.