No banking on hacked phones

 

PETALING JAYA: Customers with compromised devices will be temporarily restricted from accessing banking apps as banks in Malaysia roll out a feature that detects high-risk malware and suspicious remote access.

In a statement yesterday, the Association of Banks Malaysia (ABM) and Association of Islamic Banking and Financial Institutions Malaysia (Aibim) said the feature, called malware shielding, will be embedded within the banks’ native mobile banking apps.

Both organisations stated that the feature is designed to prevent unauthorised transactions, protect customers’ funds, and shield them from malware scams.

“It will essentially alert or block customers from conducting banking activities on compromised devices,” said the statement. 

Banks that have enabled the feature on their mobile banking apps include Alliance Bank, AmBank, Bank Muamalat, Bank Simpanan Nasional, CIMB Bank, HSBC Bank, Maybank, MBSB Bank, OCBC Bank, Public Bank, RHB Bank, Standard Chartered, and UOB Bank.

“Emphasising customer privacy, malware shielding is only activated upon the customer launching the mobile banking app and does not run in the background 24/7,” said ABM chairman Datuk Khairussaleh Ramli in the statement.

He added that customers’ banking information and personal data will remain confidential.

Bank Negara governor Datuk Seri Abdul Rasheed Ghaffour said the fight against online scams is a shared responsibility, welcoming the move by banks to enhance online banking apps with added security features.

“This helps to create a more secure banking environment for all Malaysians. We also urge members of the public to remain vigilant against requests to download apps from unofficial sources,” he added.

Customers are advised to reach out to their banks’ 24/7 fraud hotline for assistance should they encounter a temporary restriction.

When contacted, National Cyber Security Agency (Nacsa) chief executive Dr Megat Zuhairy Megat Tajuddin said the measure is well-suited to address specific challenges faced by users in Malaysia as cyber threats are becoming increasingly sophisticated and prevalent.

“In 2023, 40% of the total incidents monitored by the National Cyber Coordination and Command Centre (NC4) were malware-related. In 2024, up until June, the NC4 handled 34% of incidents related to malware,” Megat Zuhairy said.

While the temporary restriction is regarded as an important preventive step, Megat Zuhairy said its effectiveness is also dependent on users.

“They need to adhere to recommended cyber hygiene practices such as to only download apps from official platforms and avoid performing online activities through unsecured WiFi networks,” he said.

Malaysia Cybersecurity Community rawSEC chairman Ts Tahrizi Tahreb said the malware shielding technology could potentially prevent several types of banking malware that are used by hackers to infiltrate devices and perform unauthorised financial transactions.

“Some of them include Cerberus which can mimic legitimate banking app interfaces to capture user credentials and one-time passwords through overlays and screenshots,” he said.

Tahrizi added that another type of malware called Gustuff has been known to target over 100 banking apps and can automate bank transactions on compromised devices.

“These malware types often exploit vulnerabilities in mobile banking applications, making them prime targets for shielding technologies,” he said.

Malaysia Cyber Consumer Association (MCCA) said the initiative represents a proactive approach to addressing the growing threat of cyberattacks on financial systems.

“However, MCCA also emphasises the importance of implementing this feature with caution, transparency, and a strong focus on user education,” its chairman Siraj Jalil said.

He added that the criteria used to define a “compromised device” must be transparent and precise.

“The effectiveness of such a solution hinges on its ability to accurately identify compromised devices without generating false positives. A significant number of false positives could lead to legitimate users being locked out of their banking apps, causing unnecessary frustration and potential financial disruption.

“If users find themselves frequently locked out of their apps, they might resort to using web-based banking solutions, which may not be as secure as the mobile apps, or they could turn to unofficial methods to bypass the restrictions, further exposing themselves to risks,” said Siraj.

Tahrizi said banks can further enhance security and customer protection by implementing some additional measures.

“Banks should regularly test their apps through application security testing (AST) and infrastructure security testing (IST). All identified issues should be tracked, with priority given to remediating critical and high vulnerabilities,” he added.

Customers also need to be constantly reminded of the latest potential online scam attempts.

“Ongoing education and awareness of safe mobile banking practices, such as recognising phishing attempts and avoiding suspicious downloads, can empower customers to protect themselves, and this is a very effective first line of defence,” he said.

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Putting off charge for DuitNow QR payments, call for waiver for DuitNow QR payments permanent

 

New rules: PayNet said debit and credit card payments were subjected to MDR, while there is currently a MDR waiver for QR payments. — SHAARI CHEMAT/The Star© Provided by The Star Online

PETALING JAYA: Several financial institutions, including Public Bank and CIMB, have announced a waiver of the merchant discount rate (MDR) for vendors accepting payments via the DuitNow QR code platform.

CIMB has decided to postpone the MDR until the end of the year, while Public Bank will maintain the waiver until further notice. 

Public Bank has communicated on its website that it would waive the following fees for QR payment acceptance, effective from Oct 1 until further notice.

It said merchants would enjoy fee waivers for categories such as payment acceptance via Current and Savings Accounts, ewallets, and Maintenance Fee and API Integration Fee under the bank’s Enterprise Plan.

Credit card transactions under the Enterprise Plan will incur a charge of 0.25%.

The DuitNow QR service enables money transfers between banks and non-bank entities by scanning QR codes.

Related video: DuitNow QR charges won’t burden low income groups, says PM 

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It was established by Payments Network Malaysia Sdn Bhd (PayNet) under Bank Negara’s Interoperable Credit Transfer Framework.

Earlier yesterday, Paynet confirmed that vendors would be charged a transaction fee for payments received via the DuitNow QR code platform starting Nov 1.

It said there were charges for two different epayment types – the MDR and the 50sen fee for transactions exceeding RM5,000 for peer-to-peer fund transfers between personal QR codes, not payments to merchants.

ALSO READ: Charge on DuitNow QR payments will burden SME sector, says group

Merchants, it said, would receive the payment made by their customers after deducting the MDR, which is charged based on a percentage of the transaction value.

PayNet said debit and credit card payments were subjected to MDR, while there is currently a MDR waiver for QR payments.

Starting Nov 1, the MDR waiver for DuitNow QR payments would be lifted, it said in a statement, adding that the MDR was neither a new fee nor an additional charge.

“As an incentive to promote usage during the introduction of QR payments in 2019, the MDR was waived. This was extended due to the Covid-19 pandemic.”

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Battle for deposits forecast to intensify

RHB Research said that with digital banks poised to launch operations in the months ahead, it will be interesting to note how conventional banks react to the attractive deposit rates these new entities are expected to offer.

PETALING JAYA: As competition for deposits intensifies in the months ahead, one research house has bucked the trend by downgrading its outlook on the banking sector. It believes that competition for deposits could intensify towards year-end although pressure on net interest margins (NIMs) and operating expenditure may abate.

RHB Research commented that overall, banks have recorded decent second-quarter (2Q23) results, but they may not see a repeat of the hefty income in the first half of the year (1H23) from treasury and markets.

It said that with digital banks poised to launch operations in the months ahead – as exemplified by GX Bank (GXB) which began operations on Sept 1 – it will be interesting to note how conventional banks react to the attractive deposit rates these new entities are expected to offer.

RHB Research said in a note published yesterday that the revised guidance on NIMs would imply that banks are expecting 2H23 NIMs to be stable versus that of 1H23, or slightly better, while remaining watchful of loans exiting relief programmes for both the retail and small-medium enterprise or SME segments.

“For now, we forecast 2024 sector earnings growth to revert to the trend growth rate of 6% to 7% year-on-year (y-o-y), in line with our forecast corporate earnings growth of 7% to 8% y-o-y for 2024,” it said.

The research house pointed out that the banking sector has rallied by 8% since end-1H23 and by 9% since the 1Q23 results season, compared with 6% for the FBM KLCI, underpinned by the banks’ earnings holding up relatively better against the broader market.

It added: “Investors have started to look ahead towards NIM stabilisation – given that 1Q23 was likely the worst quarter in terms of NIM pressure. Also, 2Q23 earnings met expectations, while the declaration of interim dividends helped further support share prices, in our view.”

Meanwhile, casting a glance at Singapore’s GXS Bank Pte Ltd to ascertain what its subsidiary GXB would offer, RHB Research reported that GXS started off last year by offering depositors 0.08% interest in its regular savings and an additional 3.48% for its “saving pockets” accounts.

Calling GXS’ deposit account a “fuss-free product”, the research house commented, “Apart from offering better rates than some high interest savings accounts, the features that made GXS’ deposit product attractive were no minimum deposit amount, no maintenance fees and no tiered interest rate structure.”

The research unit added that the deposit account was well-received, and was followed up with the launch of micro loans, given the bank’s focus to render services to the underserved or unbanked segments such as gig economy workers and small businesses.

It revealed that in 2Q23, GXS began offering instant micro loans that the bank’s app users could apply for with ticket sizes from S$200 with tenures as short as two months, as interest rates start from 3.8% per annum.

As such, RHB Research is of the opinion that the features of GXB’s deposit product could be similar to that of GXS, while also expecting it to be similarly well received.

“That said, given the RM3bil cap to asset size during the foundational phase, the potential deposits that could migrate from conventional banks to digibanks should not be material, perhaps less than 1% of total deposits in the initial years,” it said.

It added that there had not been any significant deposit competition among Singapore banks last year as well.

Moreover, the research outfit said given the estimated deposit market share up for grabs in the Malaysian banking sphere, deposit competition should likewise be under control. “The key question is whether incumbent banks will stay rational,” it said.

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Silicon Valley entrepreneurs left in the lurch and livid, as banks topple, regulators face reckoning

 

Silicon Valley Bank was shut down on Friday morning by California regulators and was put in control of the U.S. Federal Deposit Insurance Corp..

 

 

 

In this photo illustration, Silvergate Capital Corporation

NEW YORK: Last Monday, the head of the Federal Deposit Insurance Corp (FDIC) warned a gathering of bankers in Washington about a US$620bil (RM2.8 trillion) risk lurking in the US financial system.

Last Friday, two banks had succumbed to it. Whether US regulators saw the dangers brewing early enough and took enough action before this week’s collapse of Silvergate Capital Corp and much larger SVB Financial Group is now teed up for a national debate.

SVB’s abrupt demise – the biggest in more than a decade – has left legions of Silicon Valley entrepreneurs in the lurch and livid.

In Washington, politicians are drawing up sides, with Biden administration officials expressing “full confidence” in regulators, even as some watchdogs race to review blueprints for handling past crises.

To his credit, FDIC chair Martin Gruenberg’s speech this week wasn’t the first time he expressed concern that banks’ balance sheets were freighted with low-interest bonds that had lost hundreds of billions of dollars in value amid the Federal Reserve’s rapid rate hikes.

That heightens the risk a bank might fail if withdrawals force it to sell those assets and realise losses.

But despite his concern, the toppling of two California lenders in the midst of a single workweek marked a stark contrast with the years after the 2008 financial crisis, when regulators including the FDIC tidily seized hundreds of failing banks, typically rolling up to their headquarters just after US trading closed on Fridays.

Even in the darkest moments of that era, authorities managed to intervene at Bear Stearns Cos and Lehman Brothers Holdings Inc. while markets were shut for the weekend.

In this case, watchdogs let cryptocurrency-friendly Silvergate limp into another workweek after it warned March 1 that mounting losses may undermine its viability. The bank ultimately said Wednesday it would shut down.

That same day, SVB signalled it needed to shore up its balance sheet, throwing fuel onto fears of a broader crisis.

A deposit run and the bank’s seizure followed. The KBW Bank Index of 24 big lenders suffered its worst week in three years, tumbling 16%.

“With Silvergate there was a little bit of a regulatory blind spot,” said Keith Noreika, who served as acting comptroller of the currency in 2017.

“Because they wound it down mid-week, everyone got a little spooked, thinking this is going to happen to others with similar funding mismatches.”

Representatives for the FDIC and Fed declined to comment.

The drama is already spurring arguments in Washington over the Dodd-Frank regulatory overhaul enacted after the 2008 crisis – as well as its partial rollback under President Donald Trump.

Trump eased oversight of small and regional lenders when he signed a far-reaching measure designed to lower their costs of complying with regulations.

A measure in May 2018 lifted the threshold for being considered systemically important – a label imposing requirements including annual stress testing – to US$250bil (RM1.1 trillion) in assets, up from US$50bil (RM226bil).

SVB had just crested US$50bi (RM226bil) at the time. By early 2022, it swelled to US$220bil (RM994.3bil), ultimately ranking as the 16th-largest US bank.

The lender achieved much of that meteoric growth by mopping up deposits from red-hot tech startups during the pandemic and plowing the money into debt securities in what turned out to be final stretch of rock-bottom rates.

As those ventures later burned through funding and drained their accounts, SVB racked up a US$1.8bil (RM8.1bil) after-tax loss for the first quarter, setting off panic.

“This is a real stress test for Dodd-Frank,” said Betsy Duke, a former Fed governor who later chaired Wells Fargo & Co’s board.

“How will the FDIC resolve the bank under Dodd-Frank requirements? Investors and depositors will be watching everything they do carefully and assessing their own risk of losing access to their funds.”

One thing that might help: SVB was required to have a “living will,” offering regulators a map for winding down operations.

“The confidential resolution plan is going to describe the potential buyers for the bank, the franchise components, the parts of the bank that are important to continue,” said Alexandra Barrage, a former senior FDIC official now at law firm Davis Wright Tremaine.

“Hopefully that resolution plan will aid the FDIC.”

The issues that upended both Silvergate and SVB, including their unusual concentration of deposits from certain types of clients, were “a perfect storm,” she said. That may limit how many other firms face trouble.

One complication is that the Fed has less room to help banks with liquidity, because it’s in the midst of trying to suck cash out of the financial system to fight inflation.

Another is that a generation of bankers and regulators at the helm weren’t in charge during the last period of steep interest-rate increases, raising the prospect they won’t anticipate developments as easily as their predecessors.

Indeed, even bank failures have been rare for a time. SVB’s was the first since 2020.

“We’re seeing the effects of decades of cheap money. Now we have rapidly rising rates,” said Noreika. “Banks haven’t had to worry about that in a long time.” — Bloomberg 

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