September 17, 2009

David Downing is a student of history. First National of Nebraska's chief operating officer says he prefers histories about far-flung places such as Afghanistan and the Middle East to business books and best sellers. But it's Downing's study of something closer to home -- the creation of America's railroad system -- that provides the model for his approach to managing the operations and technology organizations of Omaha-based First National of Nebraska ($20 billion in assets) and its affiliate banks (including First National Bank of Omaha and banks chartered in Kansas, Colorado, Texas, Nebraska, Iowa and Illinois).

"Omaha is the eastern terminus of the Transcontinental Railroad. [This] is one of the key technology advances in this country's history," Downing says. "Operations and technology is the rail the bank runs on. We're not a business in ourselves -- we're facilitators who position and enable the business to meet our customers' needs."

The history of the U.S. railroads also provides a cautionary tale that informs Downing's approach to managing IT. "When you stay on the right of way, and you keep your vision clear and don't get yourself diverted, you will get things done," he relates. "It's when you try to be all things to all people ... that you get muddled down. We work hard to be very simple. We ask basic questions: What is the business model this serves? How does it make our company better? What's the bottom line? All those business cases have to be answered before we embark on a technology endeavor."

The premise may be simple, but the stakes are high, acknowledges Downing, a former J.P. Morgan Chase executive who is an accountant by training. Pointing out that his agenda and budget for 2010 already are set for all practical purposes, he's now starting to address the bank's technology needs for 2011 and 2012. "I'd like to say I wear a propeller on my hat and I do all kinds of fun things in the lab, but I do not; I run the business," he says. "We can't miss by a factor of 20 percent, 40 percent or 60 percent. If we do we've built the railroad into the swamp, and then we've got a real problem. The biggest part of my job is working with my peers -- the chairman, president and CFO -- to ensure that their vision for the next three years gets translated into our plans."

David Downing, First National of Nebraska
That alignment has put First National in a strong competitive position in this tough market, although Downing reports that the financial crisis has caused the bank to shift its focus somewhat "from asset growth and deposit gathering to product quality, risk management, and capital and asset security." At the same time, he emphasizes, its principles will help First National be ready for the upturn.

"I've been in banking for 25 years, [and] I think I've been practicing all my life for the past two years," Downing reflects. "We've learned a lot of lessons over the ... years and saw that if we were prepared and were conservative and knew the steps to take, we would be in even a better position to exploit the markets when things turn around. We are much more introspective right now about the things we do; we're not as willing to take a flyer on an idea. We work on only specific products and projects that will enable our banks to serve our customers and secure the bank's assets."

A top priority for Downing in his three years with First National has been to make the bank (which is primarily an IBM shop that runs Tandem servers to support its card business and partners with Cox, Qwest and AT&T to run its network and communications services) "first-class" in terms of efficiency. It starts with requiring everyone in his organization to simply "understand their business," Downing says. Additionally, "We do zero-based budgeting and strategic planning from the bottom up. We have a 24-hour rule on issues resolution. We view operations and technology as a business -- we have budgets and set goals."