How hackers steal millions from bank accounts

The latest information from IBM Security Trusteer’s mobile security research team indicatesthat hackers have been using ‘mobile emulators’ to steal millions from financial institutions in Europe and the USA.

How they did it?

They set up a network of mobile device emulators that were behind thousands of spoof devices able to access thousands of compromised accounts. A set of set of mobile device identifiers was used to spoof an actual account holder’s device, and in each case it is likely that these accounts had been infected by malware, or collected via phishing.

The hackers have the victim’s username and password, and using an automatic process are able to “script the assessment of account balances.” They can then automate large numbers of fraudulent transfers. These are never large enough to trigger bank scrutiny at the time.

How does an emulator work?

It mimics the characteristics of several mobile devices. They are often used by developers to test applications, but in the wrong hands they are a crime tool.

According to Finextra: “IBM Trusteer says that the scale of the operation is one that has never been seen before, in some cases, over 20 emulators were used in the spoofing of well over 16,000 compromised devices.”

IBM added, “”The attackers use these emulators to repeatedly access thousands of customer accounts and end up stealing millions of dollars in a matter of just a few days in each case. After one spree, the attackers shut down the operation, wipe traces, and prepare for the next attack.”

IBM Trusteer’s intelligence team has also observed a trending fraud-as-a-service offer in underground venues, promising access to this type of operation to anyone willing to pay for it, with or without the required skill.

“This lowers the entry bar for would-be criminals or those who plan to transition into the mobile fraud realm,” says IBM, and is likely to become a growing trend amongst cybercriminals.

Neobanks grow in 2020

Some good news to come out of 2020 is the growth in neobanks. According to Finextra, Exton Consulting has produced data showing that there are currently 256 neobanks globally, and several more waiting to launch.

The data indicates that a new banking business opened every five days over the last three years, and that Europe is still the main location of innovation, with three of the five most advanced markets being in the region. They are the UK, which is recognised as a neobanking powerhouse, followed by France and Sweden. It also reports that 50 million people in Europe have opened a neobanking account.

Europe leads in neobank innovation

Other markets are catching up with Europe, most notably South Korea and Brazil, but there is also substantial movement in the USA. China is somewhat unique in its challenger bank development, but it is unrivalled in terms of its numbers of clients using the “financial super apps” available there.

On the downside, not all challenger banks have been able to stay the course. A significant number of players relied on payment interchange fees as a revenue stream, and there has also been vulnerability due to rising number of defaults on loans. As a result, more than 30 neobanks have been wound down since 2015, with Australia’s Xinja being and an example.

New routes to profitability

Exton says: “On their quest for monetizing customer relationships neobanks have learned a first lesson: payment transaction fees, premium account subscription fees, or open banking commissions from brokering 3rd party services will in most cases not be sufficient to generate profits or breach beyond operational break-even.” It added, “Our expectation much rather is that Neobanks will need to offer additional products to jump the gap to sizable profitability.”

Digital lending may be one opportunity where the neobanks can thrive. Another option is, “the morphing of the product outside of financial services via the development of a super app, ” and a third possible route to profitability “lies in providing investment services to the mass affluent market.”

Exton concludes, “Irrespective of which path neobanks will take, we remain convinced that they will need to shift into profitability mode quickly as investor patience will not be unlimited. But for those that select the paths right for them, stay focused on it and grow up as an organization, the future remains bright and full of opportunities.”

Biden & a Sustainable Investment Boom

Now that the Electoral College has confirmed Joe Biden as the 46th President of the United States, businesses can get on with looking to the future under a new administration, one that promises less scorched earth in its policies let’s say.

In the months preceding the 2016 election, sustainable investing’ was a gathering trend. Larry Fink, Blackrock’s CEO sent an open letter to global CEOs, saying, “Generating sustainable returns over time requires a sharper focus not only on governance, but also on environmental and social factors facing companies.” Any ambitions on this score were, however, shattered by the surprise election of Trump, whose administration was a threat to goals when investing around climate change and social justice,” says Justina Lai, chief impact officer at San Francisco-based Wetherby Asset Management.

The last four years has been a case of missed opportunities thanks to an obstructionist government.  However, as it finally drew to an end, the pandemic and the murder of George Floyd, amongst other issues, revived commitment to socially conscious investing.

Peter Krull, founder, CEO and director of investments at Asheville, North Carolina-based Earth Equity Advisors, said: “The reality is we’ve had more growth over the last four years than we did over the previous 12 years. After the 2016 election, people said that if the government isn’t going to work on these issues, we’re going to have to do it for ourselves.” He added an upbeat thought, “If the last four years of growth were with headwinds, I’m really excited about seeing a tailwind.”

How much ESG investment is there?

The United States Forum for Sustainable and Responsible Investment (US SIF) reports that total Environmental, Social & Governance (ESG) investing strategies rose by 42% over the past two years, growing from $17 trillion to $20 trillion. This figure represents 33% of all professionally managed US assets.

It is the view of Forbes writer Jason Bisnoff, and most likely many others, that President-Elect Biden will not have to do too much to encourage more growth in ESG investing. Furthermore, his picks for cabinet positions include several ESG investment supporters, such as john Kerry, who is his choice as special presidential envoy for climate. Allison Herren Lee, the current SEC commissioner may take the position of SEC chair, and she has made ESG and climate change central to her agenda in her time in public service.

Fiona Reynolds, CEO of the United Nations Principles for Responsible Investment, commented, “Over the last couple of years, the Trump administration brought a number of policies that made responsible investment more difficult and we hope that we can reverse some of those policies and move ahead.” Now, she says, “I’ve never felt more certain about the future for sustainability than I do at the moment.”

This enthusiasm from all quarters, plus Biden’s promise to bring the USA back into the fold of the Paris Agreement on Climate, bodes well for the future of this approach to investing.

Visa goes for USDC with Circle

Visa, the credit card giant, has joined with Circle to connect 60 million merchants to the US Dollar Coin (USDC), a coin on the Ethereum blockchain. This is yet another sign that cryptocurrencies are integrating even further with mainstream payment currencies.

Although Visa won’t have custody itself of the USDC, it is going to work with Circle to select Visa credit card issuers and integrate the USDC software with their platforms, so that it can be used for payments. What this means is that businesses will soon enough be able to make international payments in USDC to other businesses supported by Visa. The funds will then be converted into national currencies when they are spent anywhere that accepts Visa.

Circle is a part of Visa’s Fast Track program, and when it completes the course next year, that is when this new USDC program will begin, with the issuance of a new credit card that allows users to spend USDC. Visa’s head of crypto, Cuy Sheffield, said, “This will be the first corporate card that will allow businesses to be able to spend a balance of USDC. And so we think that this will significantly increase the utility that USDC can have for Circle’s business clients.” 

The partnership between Visa and Circle, helped by the $40 million investment Visa made in another firm developing a platform for holding similar assets issued on a blockchain, “is the latest evidence that the credit card giant sees the technology first popularized by bitcoin as a crucial part of the future of money,” Michael de Castillo writes at Forbes.

Sheffield said, “Blockchain networks and stablecoins, like USDC, are just additional networks. So we think that there’s a significant value that Visa can provide to our clients, enabling them to access them and enabling them to spend at our merchants.”

Currently, according to Visa’s data, “$120 trillion in payments annually are made using checks and instant wire transfers, costing as much as $50 each.” By contrast, since USDC settles on the ethereum blockchain, transactions can close in a little a[s] 20 seconds and, importantly, can be done for nearly free.

Visa has been making strong moves in the cryptocurrency sphere this year. In February 2020. Coinbase became the first company granted principal membership status by Visa. This means that Coinbase, one of the biggest crypto exchanges globally, can in turn issue cards to others.

Circle has done some rethinks of its own in regard to cryptocurrency. In 2019 it had a fire sale of its assets including Poloniex, Circle Invest and Circle Pay. It also rebranded its home page with a focus exclusively on stablecoins and central bank digital currencies. The attraction of the USDC is that it is built on the Ethereum block chain and only tiny amounts of the cryptocurrency ETH are used as “gas” to pay for the transactions.

Jeremy Allaire, the CEO of Circle Internet Finance, says of the new partnership and its probable outcome: “Imagine a capital marketplace that is for anyone who needs capital, or anyone who needs to offer capital that has the same efficiency that Amazon has for e-commerce, the same efficiency that YouTube has for content, effectively, capital markets with the efficiency of the internet, which is essentially zero.” He added, “And that will ultimately return trillions of dollars in value back to the economy, it will reduce costs for every business in the world, it will accelerate the way in which individuals can participate in commercial activity and commerce activity, in conducting their labor and interacting with businesses around the world.”