Wells Fargo (NYSE:WFC) has long been known among analysts and commentators as one of the nation's most efficient banks. As a result, when its efficiency started to slip recently, the bank responded by announcing initiatives to cut annual expenses by $4 billion by the end of 2019.

Part of that initiative is to prune its branch network. At the end of the second quarter, Wells Fargo operated the largest branch network in the United States, with 5,977 locations. That's meaningfully more than the bank with the second highest number of branches, JPMorgan Chase, with 5,217 locations.

Bank

Branch Count

Wells Fargo

5,977

JPMorgan Chase

5,217

Bank of America

4,559

U.S. Bancorp

3,091

PNC Financial

2,481

Data source: quarterly earnings releases.

Wells Fargo is already making progress on this goal. During the first six months of this year, it closed 93 branches, including 54 in the second quarter. It's now on track to close a total of 200 branches this year. And it plans to close an additional 250 branches in 2018.

But shareholders shouldn't expect savings to fall immediately to Wells Fargo's bottom line. As CEO Timothy Sloan noted on the bank's second-quarter conference call: "There are minimal immediate savings recognized from branch closures due to the initial closing costs. So therefore most of the expense benefit from the 200 branches we close this year will not be realized until next year."

Wells Fargo isn't alone in its decision to prune its branch network. Bank of America has been shuttering branches for years, as has JPMorgan Chase.

An exterior view of a Wells Fargo branch.

Image source: Getty Images.

As online and mobile banking have taken flight, it's much more efficient for banks to serve customers through digital channels. JPMorgan Chase has said in the past that it costs $0.65 to handle a deposit transaction in a branch, $0.08 per ATM transaction, and just $0.03 per mobile deposit.

It's for this reason that Wells Fargo has placed an emphasis on growing its digital distribution channels. As of the end of the second quarter, in fact, the California-based bank has more active digital users than it does primary checking accounts, with 27.9 million digital active customers versus 23.6 million primary consumer checking customers.

The takeaway for investors is this: Closing bank branches shouldn't be analogized to retail companies shuttering stores. It's instead a necessary and welcome trend that, far from signaling a bank's demise, is a necessary tactic for ensuring long-term survival.

John Maxfield owns shares of Wells Fargo. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.