Insecurity experts have warned that a vulnerability present on 86 percent of Android phones that may allow attackers to obtain highly sensitive credentials.
The vulnerability lives in the Android KeyStore which is a highly sensitive region of the OS which is dedicated to storing cryptographic keys and similar credentials. The flaw was discovered by IBM security researchers who managed to exploit the bug and execute malicious code that leaks keys used by banking and other sensitive apps, virtual private network services, and the PIN or finger patterns used to unlock handsets. The flaw has been around for a while, in fact Google has fixed it on KitKat. The remaining versions, which according to Google figures run 86.4 percent of devices, have no such fix.
It is not an easy flaw to exploit. Attackers would also have to have an app installed on a vulnerable handset which could get past all of Android’s other security protection. Still, the vulnerability is serious because it resides in KeyStore, arguably one of the most sensitive resources in the Android OS.
If you can compromise the KeyStore, you can log in as the phone's user to any service where they've got a corresponding app, or, at least, an app that remembers who you are and lets you log back in without typing a password. This means that most banking apps, which force you to type your password every time, are probably safe against this particular attack.