Dollar Scholar Asks: When Does It Make Sense to Bank in Person?
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This is an excerpt from Dollar Scholar, the Money newsletter where news editor Julia Glum teaches you the modern money lessons you NEED to know. Don't miss the next issue! Sign up at money.com/subscribe and join our community of 160,000+ Scholars.
When I was a kid, the Bank of America branch in my hometown was located next to a Burger King, an Einstein Bros. Bagels and a Chili's. This was notable to Young Julia because anytime my grandma had to stop by the bank while running errands, I got a snack. And luckily for me, she always had to stop by the bank.
So imagine my disappointment when I grew up and realized frequent bank visits were not going to be a part of my everyday life. For several years now, most of my banking has been done on my iPhone — nowhere near a brick-and-mortar branch (or delicious fast-food restaurants, for that matter).
Not only do I have to make my own snacks, but I also have lingering FOMO: Surely my grandma was getting something out of all those pit stops at the bank. I just don't know what.
Are there any benefits to doing my banking in person?
Let me start by explaining the landscape. It's a strange time for banks: Federal Deposit Insurance Corporation records show that in 2012, the U.S. had 82,965 bank branches, but by the time the pandemic started in 2020, just 73,107 were still operating. The most recent data, from 2023, puts the number of branches at 69,997.
All those closures haven't gone unnoticed. The news is dominated by scary-sounding claims like, "If current trends continue, physical bank branches could be extinct in the U.S. by 2041." (That quote comes courtesy of a report from fintech company Self.).
But bank branches aren't dead, says Isio Nelson, managing director for research, fraud and thought leadership at BAI, a financial services nonprofit. They're just evolving.
"While digital is being used more with younger generations, branches are still very necessary — and not just for taking out cash," he tells me. "Branches can be an excellent resource for education on navigating the banking system for someone who may otherwise be unfamiliar and find it daunting."
In other words, it's less about the buildings themselves and more about the people who work inside them. There are a slew of tasks financial newbies can accomplish with the help of a banker, like setting up their first checking account or applying for their first credit card. But the services offered go way beyond that, so even someone like me can benefit from visiting a branch.
I may want to pick my banker's brain on the merits of opening a certificate of deposit or a money market account, Nelson says. Or I can ask them how to budget or maintain a good credit score.
Amid dubious TikTok life hacks and shady influencers, bankers are generally people I can trust to give solid advice, says Shawn Niehaus, head of consumer banking for Fifth Third Bank. Simply by walking into a branch, I know that I'm getting expert, well-vetted guidance to help me reach my financial goals.
Sure, I could seek that out online, but people prefer to talk to people, especially when it comes to the intimate topic of money. Plus, it can be easier to navigate complex financial situations like planning out retirement savings IRL, says Aron Levine, president of preferred banking for Bank of America.
"Clients want to come into our financial centers for a conversation about their finances, especially when it concerns a larger purchase, like a car or a home, or when they want to set up a savings plan for their child’s college education, for example," he says.
As evidenced by my grandma anecdote, this is a generational trend, for sure.
A 2023 survey from the American Bankers Association shows the depth of those differences. While 60% of millennials (born between 1981 and 1996) do most of their banking via mobile apps, the same is true of only 31% of baby boomers (born between 1946 and 1964). Another 16% of boomers opt for in-person banking most often, compared to just 4% of millennials.
"Historically, clients would visit financial centers for daily transactions — depositing checks, moving money, paying bills. Today, clients more often are choosing to complete these activities via digital channels," Levine adds. "Our business has shifted from a transactional model to one based on relationship."
Building relationships with folks of all ages is key for banks these days. In fact, Niehaus says Fifth Third has been redesigning its branches to feel more casual. Gone are the days of awkward teller windows and stiff chairs where I have to sit across a desk from a stuffy dude in a suit. Banks are now more focused on providing couches, big-screen TVs and coffee bars where I can hang out alongside a banker.
It's about the vibes, and about the idea that a long-term relationship with a specific banker at a specific place can benefit me as I progress through life.
And while I have the privilege of preferring to bank on my phone, branch access can be crucial for folks in underserved communities. Low-income people are often forced to rely on alternative financial products that charge high fees and can trap them in debt. Even worse, these companies don't provide the kind of education that can help people become financially literate.
"Developing these relationships with a banker in a branch can really be the stepping stone for someone who is underbanked," Nelson says. Teaching people financial literacy can help them improve their credit scores, he adds, which is key to achieving financial stability.
The bottom line
Physical bank branches can provide the opportunity for me to connect face-to-face with financial experts who can guide me as I hit various milestones. While it's certainly possible to accomplish this online, Niehaus sums it up succinctly:"Having a personal touch matters."
Sure, bankers can sell me stuff, but they can also offer me trustworthy financial advice. While they might not be able point me to a nearby drive-thru where I can get my snack fix the way my phone can, that's still a cool resource to have in my pocket.
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