The centralized financial system is built on trust. Trust in the financial institution or bank you give your money to, trust in whoever you are trading assets with, trust in whatever company you are investing in, etc. Even banks need to trust whoever they are giving a loan to through flimsy collateral deals, credit and background checks, and so on. Decentralized finance does away with trust and creates a trustless financial system where one does not need to know or trust the other person they are transacting with. This is because all transactions are controlled by smart contracts.