The point is to custody money, of any sort. And for that, they are excellent - the economy of scale in having a single organization arrange for security of such money for thousands or millions of customers, is unbeatable. Unless you enjoy employing security guards, building vaults (digital or otherwise), and arranging transports, you want to use a bank - or risk losing all your valuables to skillful thugs every single day.

Individuals can, though. Just stuff your cash into your mattress— boom, decentralization achieved.

Banks existed before fiat currency. If you're ignorant of the history, I suggest you look up "history of the bank note".

The banking industry is not centralised. Banks provide financial services and compete against each other for customers. DeFi can't even get the most basic terminology right, yet somehow thinks that it can replace the entire financial sector.