Decentralization isn't going to be affected because the bank isn't forcing anyone to use their Bitcoin as collateral for a loan though I understand your concerns and somehow a part of me also feel that Bitcoin shouldn't be having any loan conversation with the bank in the first place because it feels like the bank is trying to get themselves involved with Bitcoin too since they are doing everything possible to get a hold of Bitcoin and they are doing it through this loan strategy.

Banks don't mine bitcoin, they don't have computational power to dominate Bitcoin network with mining hashrate. If counting a fact that even big Bitcoin mining pools still don't have enough hashrate to attack 51% on Bitcoin network, or they can cooperate with each other to have enough hashrate for doing such attacks, but the fact is there has never been such attacks for good reasons of Bitcoin miners and holders, I believe that banks will have zero chance of doing that successfully.

https://jlopp.github.io/bitcoin-confirmation-risk-calculator/
You can use this link and type the hashrate percent you have (assume you have or a bank has), to attack Bitcoin network. See the result in Reorganization risk box.

Banks never control the entire bitcoin network or the blockchain they operate only within the scope of the assets they hold or their own customer relationships. Because bitcoin is decentralized, banks have no direct way to know whether someone owns bitcoin or where that person might be holding it unless the individual chooses to disclose this information. Banks, for their part, always seek to maintain absolute control over the financial system.

The worst decision you could make is to invest your Bitcoin through a centralized authority, like exchanges that the government supports you to use through commercial banks, or independently; just know that they have full access to your personal information, as you have passed through their KYC, and they could use this against you at any time. Bitcoin is all about freedom, and we can have it only when we are always on a decentralized platform.

Banks giving people loans with bitcoin as collateral doesn’t necessarily mean bitcoin have lose  his decentralization. The main issue is when people start to depend more on banks and allow them to control their bitcoin. Bitcoin is to give people financial freedom but if we depend on the same institutions that we are trying to free ourselves from, then we need to ask ourselves what we have really gained.

The power of bitcoin is with people and it depends on how we choose to use it will determine if we will maintain that freedom or go back to our bank system.

The fear here is that a lot of people are already buying the idea of using bitcoin as collateral. The bank can’t control bitcoin as a whole for instance bitcoin is decentralized except they have full access to one bitcoin then we can say the bank can control the bitcoin but, not general.
I wonder why will anyone make such move, after giving every details as collateral definitely that’s how this works, every information and detail about an asset will be provided to the bank for the period of time till the expected date, let’s not forget the bank still holds data stored meaning the person in question is not 100% safe which clearly introduce centralized risk, I think this is what op is trying to state, well anyone who’s ready to take the risk can go ahead but, bitcoin remains decentralized.

Even if the bank can invite people, it cannot control Bitcoin. People usually borrow money from the bank or deposit money in the bank, in which case people are directly or indirectly responsible to the bank. For example, when you go to withdraw money from the bank, the operation requires you to deposit your physical or institutional assets as collateral. In this case too, you are responsible to the bank but Bitcoin is not responsible to the bank in any way. Since you are responsible after taking a loan from the bank, the bank can control you. But there is no liability relationship between Bitcoin and the bank, so the bank can never control Bitcoin. That is why there is a centralized relationship between the bank and the people, but there is a decentralized relationship between the bank and Bitcoin. If ever the bank and the government could control Bitcoin like paper money, then Bitcoin would not have come to the current position, Bitcoin would have gone under the government and the bank long ago.

Banks have for a while now wanted to take control of BTC, they can't, so they think the best way to do it is a render loan. When people use BTC as collateral, they bridge, and their BTC automatically becomes the bank's. If lending can't stay Native like TBV is doing, then there is no point to it.