Hello:

It has not been held to be an invasion of privacy, for two reasons. First, getting a driver's license is not as right that every citizen insist upon, and it is something that you are voluntarily seeking. So the threshold is lower as to the type of information that can be sought to provide such a service than it would be for a government service that is your entitlement by law. Second, it has been recognized that to issue a license that is very commonly used as identification for a very wide range of activities well beyond permitting typos to drive a car, it is in the public interest to demand certain documents to verify that the licence may be legitimately issued. So while it is intruding on your privacy, the rationale is that this is outweighed by the greater interest society has as a whole to maintain integrity of the identification system.

Documents like a utility bill or proof of employment in the area can usually also be used to confirm residency. I realize that is also asking for personal information, but maybe that would be less intrusive than showing where you bank.