Consolidation & Virtualization Pay Off Big at First National of Nebraska

by Mary E. Shacklett
March 31, 2008

With $20 billion in assets and more than 7,000 employees, First National of Nebraska (www.fnni.com) is one of the top-50 financial services holding companies in the U.S. Its headquarters is Omaha, NE, where it has been operating for the past 150 years. Today, First National serves more than 6.6 million customers in all 50 states, with more than 90 banking locations in Nebraska, Iowa, Illinois, Colorado, Kansas, South Dakota, and Texas. First National is the ninth largest merchant processor, a top-10 commercial card issuer, the eleventh largest U.S. issuer of bank credit cards, a top-20 electronic funds processor, the ninth largest U.S. agricultural lender with customers in 49 states, and one of the leading providers of project finance to the ethanol industry.

Being the CIO of such a diverse banking organization requires flexibility and attunement to diverse lines of business, each with its own specialized requirements for processing, security, business agility, and asset management.

“We have three distinct business areas that IT provides services to,” says Ken Kucera, First National’s CIO. “One segment of our banking market consists of small community banks that serve towns of 1,000 to 30,000 people. Each of these banks possesses its own operating charter and lending limits—but its technology is fully run from our 32-processor System z mainframe in the Omaha data center. At the other end of the banking spectrum, we have large metropolitan banks in cities such as Omaha and Dallas. The transactions and back-office activities of these banks also are processed through our System z. The third segment of our business is card and merchant processing. We provide national card processing and settlement services for credit and debit cards, and merchant processing and settlement services for major retailers such as L.L. Bean and The Gap. All this settlement activity goes through the mainframe.”

Kucera says that First National processes millions of transactions through its z9 mainframe every day. “We use proven System z software such as CICS and IMS for online processing, and make heavy use of VSAM for our batch processing,” he says.

Since First National’s z9 processes transactions for more than 20 separate banks, it uses a system of chargebacks for centralized service to these customer institutions. “We base our chargeback structure on the number of customer accounts and the number of transactions per institution,” says Kucera. “We then look at storage and CPU usage, and we come up with a weighted average cost, which is then proportionately assigned to each institution.”

In addition to its core transaction processing on z/OS, First National also has six Integrated Facilities for Linux (IFLs) on its z9 that run applications for customer service, branch systems, backroom operations, and Website traffic. “These systems formerly were run on separate servers, but we consolidated them on the System z because of its reliability and greater economy of operation,” says Kucera.