Interesting, every bank I have asked in the last several years accepts loose change, but not wrapped change (it has been 10+ years since a bank has accepted wrapped change from me). Most of them have their own coin counting machines and don't charge members to deposit the loose change. One of them even told me they don't have a coin counting machine, but will count my change by hand for no charge (and will not accept wrapped coins, and I was a member). We are only talking about 5+ banks here, but with 100% consistency, they accept loose change and not wrapped change...
Whether it's a loose change or banknotes it's still the official currency. Banks cannot refuse or charge you for processing loose change transactions.
Not 100% sure on this one, but think that even a private business cannot refuse to accept loose change payments (may be different laws in different countries).
...so either I live in the twilight zone, or Coinstar is for the unbanked and uninformed.
It's about location and convenience. If you have a coinstar machine in your local shop, you wouldn't want to make an extra trip to the bank.