ATM Outage Stirs Debate

Malware, Outdated Tech Get Attention as Cause

By , November 24, 2010.
ATM Outage Stirs Debate

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See Also: Stop Mobile Payment Fraud, Not Customers

b>Editor's Note: BankInfoSecurity.com on Nov. 15 reported that most of the institutions, including BofA and Fairwinds, allegedly hit by the outage denied claims that malware was involved, and in some cases said they were not impacted by any ATM or online outage at all.

Several financial institutions saw their ATM and online banking channels taken offline over the weekend of the daylight saving time change. The institutions allegedly affected by the outage, including Bank of America, Chase, U.S. Bank, Wells Fargo, Compass, USAA, Suntrust, Chase, Fairwinds Credit Union, American Express, BB&T on the East Coast and PNC, reportedly blamed the downtime on a computer glitch related to the time-zone change.

But Julie McNelley, a senior analyst at Aite Group LLC who covers banking and payments fraud, says more is likely going on behind the scenes. In fact, she says the outage could have been related to anything from a widespread malware attack to outdated technical infrastructures.

"Infrastructure is certainly a problem with banks," McNelley says. "They acknowledge it." And given the proprietary nature of most banking institutions' code, she says it's unlikely that a bug related to the time-zone would simultaneously hit all of these institutions, or at least within the same relative timeframe. "That just doesn't seem like a plausible reason for me," she says. "I think malware if probably the most likely culprit, or some sort of coordinated attack."

During this interview, McNelley discusses:

  • Outsourcing to third-party vendors;
  • The link between the ATM and online channels; and
  • Outdated technology and infrastructures.

McNelley has more than a decade of hands-on product management experience working with financial institutions, payments processors and risk management companies. She most recently served as senior vice president of product management with Golden Gateway Financial, where she developed and managed new financial services lines of business. Before joining Golden Gateway, she was vice president of product solutions with Early Warning Services, where she managed a suite of fraud prevention services. Under McNelley's leadership, Early Warning launched multiple new solutions to successfully detect and prevent fraud; further, she was a key member of the team that facilitated the spin-off of Early Warning Services from First Data Corp. to Bank of America, JPMorgan Chase, Wells Fargo, and BB&T. She also led operational process improvements for NextCard, identifying points of compromise and implementing solutions to reduce fraud and operational expenses. She began her career as a research analyst at E*Offering, where she analyzed online financial services and risk-management firms.

McNelley holds a master's degree in international policy from the Monterey Institute of International Studies and a bachelor's degree in business administration from Michigan State University.

Simultaneous ATM Meltdown: More Than 'Glitch'?

TRACY KITTEN: Julie, Bank of America, Chase, U.S. Bank, Wells Fargo, Compass, USAA, SunTrust, Fairwinds Credit Union, American Express, BB&T on the East Coast, and PNC were all reportedly affected by this weekend's glitch. The banks are referring to it as a time-zone glitch, but could there be more going on here?

JULIE MCNELLEY: There certainly could be. It seems very odd that all of them would have the same bug pop up the same weekend. This is three years after Congress changed the time zone to be the first weekend in November. It seems that it would be odd that it would take three years for this bug to pop up and hit all of these banks at the same time.

Outdated Infrastructure or Malware to Blame?

KITTEN: Do you think it could be related to outdated infrastructure, or do you think they could have all been hit by some type of malware attack?

MCNELLEY: I would say that infrastructure is certainly a problem with banks. They acknowledge it. Much of their code is proprietary, so I would be very surprised if they all had the same bug coded into outdated infrastructure. That just doesn't seem like a plausible reason for me. I think malware if probably the most likely culprit, or some sort of coordinated attack. It seems, based on the players, based on the locations, that this was somebody testing, trying to figure out how deep they can penetrate, and it looks like something was successful.

Follow Tracy Kitten on Twitter: @FraudBlogger

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