DeFi surely has a lot of potential. Imo it won't fully replace TradFi, but it will definitely become more complementary. There are possibilities of connecting CreditCards with Stablecoins and payments are directly possible and deducted from the blockchain wallet balance. While DeFi grows it could gain more marketshare from banks and TradFi. The more DeFi suppliers and options there are, the harder it is for regulators to shut it all down. This leads to a bigger growing parallel economy, that is potentially safer, more decentralized and backed by collateralized assets. Governments and banks won't like it, but technology allows it and governments always one step behind.
And even if governments try to crackdown, there are many P2P options that bypass governments or there are nation states that want to escape the hegemony of the EU and USD. So they are very open and welcome to Bitcoin and other crypto (e.g. El Salvador). In the end those countries while thrive, while the nations relying on USD keep pulling themselves down with inflation, printing, debt, etc. etc.
A decentralized economy needs decentralized money. In the next 1-2 years we will definitely see this growing at a fast pace.