USAA Became Early Adaptors of Cutting-Edge Technologies

Stacks of paper took over every available space at USAA in the 1960s.Stacks of paper took over every available space at USAA in the 1960s.

In the late 1960s, USAA was so overrun with paperwork that management considered building a three-story annex just to house it all. The beginning of the Vietnam War, coupled with the draft, sent membership numbers soaring, producing an unprecedented paper trail. 


Insurance forms, member files and policy claims were stacked into 18-inch piles and carefully crammed into every spare nook and cranny. Open shelves. Empty drawers. Even the occasional spare laundry basket. Can you imagine?!


In 1968, an internal study found that processing one USAA auto policy required 55 different steps, with each file passing through 14 different units over four floors. With 83,000 files circulating the company that year alone, newly appointed CEO Robert McDermott announced during his first official management meeting that USAA would transform into a paperless company.


Though McDermott would later call this his “impossible dream,” the new CEO believed a paperless operation would not only benefit the environment but drive down costs and boost overall employee morale.


Over the next two decades, USAA pushed toward that goal by becoming early adopters of cutting-edge IT technologies. But none truly delivered a truly paper-free operation.


In the early 1980s, two magical words, “image processing,” came onto McDermott’s radar. At the time, the concept of scanning a document was often written off as an IT pipe dream. 

Undeterred, USAA formed a research and development team that built a prototype in 1984. McDermott viewed this early prototype as a critical proof of concept that large-scale image storage was possible.


After meetings with multiple potential partners, USAA collaborated with IBM on the project, which bore incredible fruit. IBM would later credit our all-hands-on deck collaboration with bringing the image processing systems on line two years sooner than if IBM had worked alone on the project.


While primitive compared to the advanced storage systems that we use today, each of these systems was able to catalogue 18 file cabinets’ worth of information, a stunning step toward achieving USAA’s paper-free aims.


By 1990, USAA accepted roughly 1,500 terminals into its policy service and underwriting departments. The terminals swiftly processed 10,000 new letters each day while allowing the originals to remain in USAA’s mailroom and dramatically reduce clutter in offices.


The adoption of this new tech transformed USAA forever. Letters, policies and all manner of documents and mail could now be scanned onto computers and viewed by anyone in the company, essentially automating what had been a labor-intensive, paper-pushing process.


Now those processing power and storage capabilities have been eclipsed in ways that McDermott never could have dreamed of, creating the digital operation that we have today.



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