My understanding is that low-fee accounts with low balances have never been profitable for banks. Perhaps they were used as a way to bolster the bank's image and/or as a long-term loss leader to attract customers who might eventually become profitable. As long as a bank has few competitors and those competitors are also subsidizing unprofitable accounts then everyone can afford to do so.

But this is an unstable equilibrium.

If competitors focus on attracting more profitable customers then I'd imagine that this subsidy becomes unsustainable as unprofitable customers migrate to banks with lower fees and minimums and profitable customers migrate to banks with higher rates. (Which those banks can afford to pay because they are no longer subsidizing as many unprofitable customers.)