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November 2nd, 2008

IBM’s New USB-based Device Might Allow Safer Online Banking

IBM has developed a device for online banking so customers plugging into any computer can protect transactions and find out if Trojan malware is trying to steal funds. When the device is plugged into any computer, it creates an TLS/SSL-based channel to a banking server, acts as a proxy program that lets the user connect over the Internet to the bank’s server, and makes visible to the user exactly what is transmitted over this channel to the bank:

The ZTIC achieves this by registering itself as a USB Mass Storage Device (thus requiring no driver installation) and starting a “pass-through” proxy configured to connect with pre-configured (banking) Websites. After starting the ZTIC proxy, the user opens a Web browser to establish a connection with the bank’s Website via the ZTIC. From that moment on, all data transmitted between browser and server pass through the ZTIC; the SSL session is protected by keys maintained only on the ZTIC and, hence, is inaccessible to malware on the PC.

Created in IBM’s Zurich Research Lab, the device is still a prototype and being tested in a few trials in Europe, says senior researcher Michael Baentsch. IBM officially calls it the “Zone Trusted Information Channel” because the little USB-based device works to set up a secure channel to an online banking site supporting it. “The stick is the secure communication endpoint,” said IBM researcher Michael Baentsch. “What the stick sees, the server gets.”

“It doesn’t prevent a man-in-the-middle attack on the PC, but it makes them visible,” Baentsch said. After logging on, if a banking customer intended to complete a certain transaction but saw that inexplicably there was different information about to be transferred – perhaps through a trick of a Trojan on the machine – that action could be stopped.

The device doesn’t detect or eradicate the Trojan itself, but does give users a better chance at thwarting malware-based attacks – if they’re paying attention to what they’re doing by checking the window of protection provided by the Zone Trusted Information Channel.

IBM, which hasn’t announced general availability of the device yet, says it’s a way for banking customers to validate online transactions in an era when malware bank Trojans have become prevalent.

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