Exclusive: Why Millennials and GenZers love going to the bank

(CNN) — Do Millennials still go to the bank? America’s banks have rapidly shut down branches over the past decade to slash costs and adapt to a world in which deposits can be made on smartphones.

The number of US bank branches has shrunk by more than 3,000 since 2010, according to Deloitte. Bank of America alone has slashed its branch count by more than 1,400. Not only does the shift away from physical branches save banks money, it makes sense given how much younger Americans rely on their smartphones for daily life.

Yet new research suggests banks should think twice before they shut down their next bank branch: Many customers, especially younger ones, still regularly rely on physical banks to make deposits, get paper money and even pay bills.

Seventy-two percent of GenZ consumers visit a physical bank branch at least monthly, the highest of any age group, according to a study of 1,000 consumers by Adobe Analytics shared exclusively with CNN Business. And 60% of Millennials say the same.

Surprisingly, older Americans were less likely to visit physical banks monthly, with GenX (50%), boomers (55%) and traditionalists (58%) saying they did so.

“The death of retail branches is greatly exaggerated,” Nate Smith, group manager at Adobe Analytics, told CNN Business. “That personal interaction is still very, very important today.”

Smith compared the findings with the realization that many shoppers still value brick-and-mortar stores for returns and trying on clothes.

Why are younger Americans going to bank branches? Forty-five percent of GenZ consumers said it was to make deposits, followed by paying bills (28%) and to get face-to-face customer service (25%). The Adobe research also said GenZ and Millennials are going to the bank to get documents notarized and to apply for mortgages and other loans.

The study found that all age groups agree that physical branches are an important part of the banking experience. Not surprisingly, that importance is most evident among older generations: 70% of GenX, 83% of boomers and 92% of traditionalists.

Still, two-thirds of GenZ consumers and 68% of Millennials said physical branches are an important part of the banking experience, according to Adobe.

“It’s important for banks not to overcorrect and not to forget that people like to interact face to face,” said Vivek Pandya, lead analyst at Adobe Digital Insights.

Banks shouldn’t ‘give up’ on branches

Customers especially prefer face-to-face interactions when opening new accounts.

A Deloitte survey released earlier this year found that bank branches are the preferred method among US consumers for applying for mortgages (65%), wealth management accounts (62%) and checking accounts (58%).

“Banks should not completely give up on branches yet,” Deloitte consultants wrote in the report. “Customers still prefer the human touch.”

Yet banks have substantially slimmed down their branch networks in recent years because of pressure to cut costs in a low-interest-rate environment and because of the popularity of mobile banking. The rise of payment platforms like Venmo and mobile check depositing has lessened the need to go to banks everyday.

Bank of America operated 4,302 branches across the United States as of the end the third quarter. That’s down from 5,700 at the end of 2011. And yet over that span the bank’s deposit base has grown 35% over that timeframe to nearly $1.4 trillion.

Wells Fargo’s branch count has dropped by 804, or 13%, since the end of 2012. That’s partially because a majority of Wells Fargo’s customer interactions now happen through its digital channels. Wells Fargo shut down 300 branches last year alone in addition to selling all 52 of its locations in three Midwestern states.

JPMorgan Chase is shifting in the other direction: Last year marked the first in nearly a decade that Chase extended its presence in several states by opening new Chase branches.

Many younger Americans don’t seem ready to embrace online-only banks. Less than half of GenZ (42%) and Millennials (49%) would consider online-only banks with no physical branches, Adobe found.

Chat bots and Amazon Alexa

Although banks have shut down countless branches, they are investing heavily in emerging technology to improve the customer experience. For example, banks have rolled out artificial-intelligence-assisted chat bots and voice skills apps on home speakers like Amazon Alexa that can answer questions, perform simple tasks and point customers in the right direction.

Those investments seem to be paying off, especially with younger customers.

Among those who have interacted with chatbots, the Adobe study found that two-thirds of GenZ and 53% of Millennials found the bot experience to be better than interacting with a human representative.

“There is a nefarious notion associated with AI and machine learning. We’re seeing that’s not the case,” said Adobe’s Smith.

However, customers still want to deal with a real person when it comes to complex issues.

When asked about customer service needs, just 21% of GenZ and 23% of Millennials prefer bots over humans.

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