Wednesday, May 02, 2012

Reverse authentication for banking

A persistent problem with retail banks is that they phone you and then ask you for information.  A common scenario is that the bank's fraud department calls because of a suspicious debit or credit card transaction.  What follows is, from a security perspective, dangerous.

Either the bank just assumes that you'll accept that they really are your bank (and not some random person trying to get private information from you) or they'll go through some weak authentication (such as telling me half my postcode).  Sometimes they have the audacity to call me and then ask me to prove that I am me even though they just called me.

All this ridiculous nonsense can be fixed by use of the two factor authentication tokens that banks are now giving out.  In the UK Barclays has PINSentry, HSBC has Secure Key, NatWest has Card-Reader.  These tokens are usually used for logging in to online banking or authorizing a transaction, i.e. they are used so that you can prove to your bank that you are you.

But they can be used the other way around.

Imagine the phone ringing in your home:

Caller: Hello, Mr Foo it's Barclays Fraud Department calling.  We need to ask you about a transaction on your account?

You: OK

Caller: Do you have your PINSentry handy? I'd like to use it to prove that this is Barclays calling.

You: Yes, I have it right here.

Caller: Please switch it on.  A six digit number will appear on the screen.  I'm going to tell you the first three digits.

You: OK, it's on.

Caller: The first three digits are 4 7 2.  You should be able to see it on the screen.  That proves that this really is Barclays calling as only we would be able to predict the next three digits.

You: Yes, I see that.

Caller: And can you tell me the other three digits?  That way I'll know you really are Mr. Foo.

You: Yes, it reads 4 9 7.

Caller: Great.  Let's talk about the transaction our system has flagged...

With a simple conversation like that you've proved that you are you, and the bank has proved that they are who they say they are. Additional levels of authentication can be added (such as asking for personal information), but the key is that the two factor device contains a secret shared between your bank and you.

If you enjoyed this blog post, you might enjoy my travel book for people interested in science and technology: The Geek Atlas. Signed copies of The Geek Atlas are available.

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