The last few years have seen a sharp rise in the power and features of smart phones such as the Blackberry, Apple iPhone, and most recently Google Android-based phones.

Coupled with this rise is a new ecosystem of mobile application development, made mainstream by Apple’s App Store for the iPhone which boasts over 30,000 applications available for download.

This trend has reached a new, troubling milestone with the discovery of several fraudulent banking applications on the Google Android online store.  The programs were disguised as genuine mobile banking applications and were designed to steal online banking credentials from anyone using them.

Although the applications have now been removed it highlights the constant evolution of the security threat landscape.  As technology becomes more ubiquitous it extends the threats in what are frankly quite predictable directions, at least for the security-minded among us.The Google Android store’s main vulnerability to this threat is its openness, which to developers and customers is seen as one of its strengths.  Apple has long been criticized for its closed approach to the iPhone App Store, requiring all applications to be manually checked and approved before they are made available.

The Apple approach is unpopular with developers who struggle to coordinate the marketing of their application launch, provide timely updates to customers, and a raft of other e-commerce related issues such as refunds, discount promotions or giveaways.  It has also been criticized as anti-competitive due to some controversial denials of applications that competed with iPhone features.

The human element of Apple’s process is also fallible.  Malicious applications may slip through the scrutiny of the people responsible for approvals.

Google’s approach has no such approval restrictions but has a similar human weakness.  A malicious application can more easily make it onto their store and has to be noticed by someone and notified to Google before it can be removed.

Consumer trends noticed in the iPhone App Store can become major security risks for Android phone owners – the irresistible lure of free stuff.  Some of the most popular iPhone apps are free ones, ranging from simple games to funny photo manipulation software to ordering pizza online.

When presented with a free application that lets you put silly hats on the heads of people in your photos who can resist giving it a try.  But what if that application is secretly uploading those pictures to a website, or trawling your contacts list for email addresses to spam.

Just as banks were targeted with fake applications so too could any online shopping application be hiding malicious code behind a familiar brand name.  A pizza ordering application, or one that lets you browse the Amazon book store, that asks you for credit card details then “fails” with an innocuous “try again later” error (or worse succeeds thanks to open APIs for some e-commerce sites) now has a copy of your credit card information.

It comes as little surprise then that a recent security survey showed that more than 54% of businesses plan to deploy mobile anti-malware protection to their fleet of smart phones by the end of 2010.

Across the mobile computing industry though there will remain a weakness at the consumer level if only businesses are turning their attention to smart phone malware protection.