One of the first things we did after moving into our house in Germany was look into opening a German bank account. I was amazed at how many of my American friends don't have a German bank account. Honestly, you don't have to have one. You can just pay your landlord directly in cash at his bank or a local bank, same with doctor bills and utilities. However, I find that having a German bank saves me time and money. Not only that but in Germany most places we shop only take cash or the EC card (which is a European debit card).
When you're comparing different banks ask to see a copy of their fees in writing. Sadly, I did not find any "free" banking in my town. I was not used to this because in the States I will only bank with a bank if there are no fees associated with it. Fees vary from bank to bank. I pay 2 Euros per month and can make unlimited deposits, pay my bills online for very cheap, and get an EC card. Most banks offer services such as online only options, or limit the deposits you can make into your account (except for direct pay), some include an EC card, others have a monthly or quarterly fee for an EC card. Not to mention some banks charge a small fee to use their EC card. My bank allows me to make 5 purchases a month without charging me. Since we also do business in USD it is important that I can get Euros out of the ATM and deposit it into my bank account without any additional fees.
So why would one want to open a German bank account? One of the biggest reasons we decided to open a German bank account was to make our German transactions easier. All of our medical bills, rent, utilities, etc. are paid online. It helps to know German because most banks are only in German. However, once you learn how to bank in German it is not much different than paying bills in English. Also we wanted an EC card. After making the large 1200 Euro purchase for our dining room table and having to get cash out because the department store did not take credit cards, we decided we needed an EC card. We are Americans after all. Most Americans don't really like carrying around a lot of cash. Not using a credit card is easy for us because we rarely use a credit card anyway. But not having a debit card was difficult.
I encourage you to consider opening a German bank account if you live in Germany. It is really simple and and makes life a little easier. My son loves our bank, just about every time we go he gets a toy. Lately he's been getting toy cars. The sweet people who work at our bank love children and are always so kind to us.