Your bank is in the business of figuring out how likely you are to repay loans. They'll probably ask you these questions, since answering them makes you a better customer. But refusing to answer puts you in a low credit-rating bucket.
Banks already use your transactions to figure out how creditworthy you are. If you want to avoid that, you can do all your business in cash, but you will pay for it if you ever want a mortgage. All they're doing is offering you the option: if your privacy is worth, say, 2% per year on a $100K mortgage, then go ahead. But for lots of people, privacy has value, but not an infinitely high value.
You can argue that it's unfair for your desire for privacy to imply that you have something to hide. But if you do, better blame the people who do have something to hide and claim that they just believe in privacy: if such people didn't exist, you would be able to maintain your privacy at a much lower cost.
Maybe you could use a real-world example. Let's say you're hiring an employee, and your employee casually mentions that he changed his name last year. "What was your original name?" "Not telling." "Did you do anything that would give you a good reason to change your name?" "Not telling." "Can you tell me who you used to work for under your previous name, and why you're no longer there?" "Ugh. Stop trying to violate my privacy. Just assume that I have good reasons not to tell you information that you would use to make a reasonable decision; it's totally unfair to lump me in with people who would do that to cover up something terrible they've done, or some unsavory associations they have. I'm not one of those people. Trust me."
A bank doesn't operate alone in a vacuum. As the number of people who have prime credit shrinks the competition to lend to those people will go up. They can't simply raise profit margins because there is always another lender out there who will be happy to take on a prime credit borrower.
Edit: http://www.cardhub.com/edu/bank-market-share-by-deposits/ According to this site, the market share of the top 10 banks is about 45%. Those statistics are not highly precise but it illustrates the point I am trying to make.
That's not necessarily true; the models might predict that people who don't have accounts may be more creditworthy.
Or the banks will just raise the profit margins.
Some people will suffer, but keep in mind that when those people oppose this, they are saying "I want to hide material information from the people with whom I do business; if they knew the truth about me, I would get a worse deal." That's fraud.
What about "my bank has no business spying on who my friends are or what I do on my free time"?
This raises the cost (possibly prohibitively, if the number of people who refuse to give out an account is so small that banks can outright refuse credit to them) to anyone who isn't willing to sell out their privacy, and more importantly, their friends'.
And of course, people like me who just don't have an account are outright fucked.