The banks are thinking about introducing a new anti-phising meaure called the ‘chip authentication protocol’. How it works is that each customer gets a device like a pocket calculator in which you put your ‘chip and PIN’ (EMV) card, enter your PIN (the same PIN you use for ATMs), and it will display a one-time authentication code that you’ll use to log on to your electronic banking service, instead of the current password and security question. The code will be computed by the card, which will encrypt a transaction counter using the EMV authentication cryptogram generation key – the same key the EMV protocol uses to generate a MAC on an ATM or store transaction. The use model is that everyone will have a CAP calculator; you’ll usually use your own, but can lend it to a friend if he’s caught short.
I can see several problems with this. First, when your wallet gets nicked the thief will be able to read your PIN digits from the calculator – they will be the dirty and worn keys. If you just use one bank card, then the thief’s chance of guessing your PIN in 3 tries has just come down from about 1 in 3000 to about 1 in 10. Second, when you use your card in a Mafia-owned shop (or in a shop whose terminals have been quietly reprogrammed) the bad guys have everything they need to loot your account. Not only that – they can compute a series of CAP codes to give them access in the future, and use your account for wicked purposes such as money laundering. Oh, and once all UK banks (not just Coutts) use one-time passwords, the phishermen will just rewrite their scripts to do real-time man-in-the-middle attacks.
I suspect the idea of trying to have a uniform UK solution to the phishing problem may be misguided. Bankers are herd animals by nature, but herding is a maladaptive response to phishing and other automated attacks. It might be better to go to the other extreme, and have a different interface for each customer. Life would be harder for the phishermen, for example, if I never got an email from the NatWest but only ever from Bernie Smith my ‘relationship banker’ – and if I were clearly instructed that if anyone other than Bernie ever emailed me from the NatWest then it was a scam. But I don’t expect that the banks will start to act rationally on security until the liability issues get fixed.