Kreskin is correct Daz
You - well, maybe not you personally - but someone does pay for those "free" services. There can be a number of ways. The rate of interest paid on a deposit account may not be as high. Credit may not be as freely available. The rate of interest you pay when you do receive a loan may be higher, etc.
"Disintermediation" in North America has happened more slowly in Europe. Disintermediation in this case is the process of separating the banks as the wholesaler from you and the credit market. (In business, "disintermediation" in general means to do away with the wholesaler.) In North America, banks are no longer the primary provider of credit to individuals and institutions. The capital markets are. That's not the case in Europe. Europe is 5-15 years behind North America in financial engineering, for example securitizing credit card receivables and selling them into the capital markets. This disintermediation has increased the sources of supply of capital, which means there is more competition for the banks, which means banks have to lower rates to win business in the loan market. Thus, because profits are being squeezed in the highly commoditized lending market, banks try to recover costs elsewhere. This is where fees come in. Fees more accurately, and thus more efficiently, reflect the true cost of the "free" service you get at your bank because it costs money for you to talk to that teller, to process that deposit slip, to clear that cheque, etc.
In England, I went to bank after bank after bank trying to open up a savings account. It wasn't until I went to the 10th or 12th institution - a building society - before one agreed to open me an account. But before they let me, I had to wait 2 weeks AND get a written reference from someone in the UK who had known me for a year or more. And I had a job, a work permit and a degree - in finance no less! Perhaps its changed, but it was a nightmare.
