The vulnerability is found in Android's secure storage service KeyStore, and can be misused to cause a stack-based buffer overflow, which would then allow malicious code to be executed under the keystore process.
By leveraging this flaw, a malicious app could harvest the device's lock credentials, and master keys, data and hardware-backed key identifiers from the memory and the disc. It could also interact with the hardware-backed storage and perform crypto operations (e.g., arbitrary data signing) on behalf of the user, the researchers noted.
But, in order to be able to do this, the app would have to bypass Android's DEP ad ASLR protection features, as well as the stack canaries and the encoding.
While this is all possible, the good news is that IBM's researchers haven't seen this vulnerability being exploited in the wild yet.
The vulnerability was discovered last September, and immediately disclosed to the Android Security Team.
A patch for the flaw was included in the new Android version (4.4 - KitKat) a few months later, so if you haven't updated your OS, this might be a good time to do it.
As of June 1, 2014, the percentage of users who use KitKat is around 13.5 percent.
For additional details about the vulnerability, check out Roee Hay's blog post.