When explaining BuyerDocs to title companies, I often hear “we already have a secured proprietary system” for sharing wire instructions with home buyers and lenders. However, most people are unaware of the dangers of proprietary systems and how they are MORE vulnerable to security holes and thus hackers.
One of the most common debates between proprietary systems and standardized systems exists in software development. In software development, there are generally two models:
- closed-source software (i.e. proprietary)
- open-source (i.e. standardized)
The main reasons for choosing a standardized system, e.g. open-source software, are lower costs, higher quality, and better security.Proprietary systems, like closed-source software, cost more because the cost is not amortized over multiple users. Software development is a non-recurring cost.
If it costs $100,000 to develop a software system, and 1 business uses it (proprietary), it costs that business $100,000. However, if the same software is used by 1,000 businesses (standardized), the cost is amortized, and each business only pays $100.
More importantly, closed-source software (proprietary) has many more bugs than open-source (standardized), leading to worse quality and poorer security. One study shows closed-source software typically has 20-30 bugs per 1,000 lines of code while open-source software has 0.17 bugs per 1,000 lines. In other words, proprietary software has ~150x more bugs than standardized software. These bugs leave proprietary systems more vulnerable to hackers.
There are cases where proprietary systems/software make sense e.g. companies looking to capitalize on their intellectual property. However, that is not the case when title companies develop proprietary systems for sharing wire transfer instructions. In these cases, title companies are costing themselves more and leaving themselves vulnerable to hackers because their systems are not as well tested.
In the title industry, it only makes sense to use a standardized system to protect against wire fraud. BuyerDocs is the standardized system, and because of this, BuyerDocs costs less and provides better security (i.e. fewer bugs) than a proprietary system.