Why is star connection used in a three phase transformer?

The power of all three phases can be transmitted on three conductors.

A star connection, as opposed to a delta, provides a grounding reference. Also, for ground faults on the secondary (assuming no delta third winding, or source third winding) will be a direct ratio similar to phase faults, instead of 57%. Another reason is to avoid the inherent phase shift involved in a delta/star configured transformer.

A 'star-connected' secondary is the standard European connection for a three-phase distribution transformer, as it provides a line voltage of 400 V together with a phase voltage (i.e. line to neutral) of 230 V.