Passwordless Authentication Market Size, Share & Industry Analysis, By Product Type (Fingerprint Authentication, Face Recognition, Iris Recognition, and Others), By Authentication Type (Single-Factor Authentication and Multi-Factor Authentication), By Industry (BFSI, Government, Retail & E-commerce, Healthcare, IT & Telecommunication, Aerospace & Defense, and Others), and Regional Forecast, 2024-2032

The global passwordless authentication market size was valued at USD 16.51 billion in 2023. The market is projected to grow from USD 18.82 billion in 2024 to USD 60.34 billion by 2032, exhibiting a CAGR of 15.7% during the forecast period.

Password authentication is a modern way of verifying user identity without the need for a traditional password. This method provides alternatives to passwords, such as biometrics, mobile push notifications, and hardware tokens. This method offers several advantages over traditional password-based authentication methods, including improved user experience, enhanced security, protection against cyber-attacks, and reduced dependence on memorizing passwords. Further, it helps organizations to strengthen their security and streamline user authentication processes.

The COVID-19 pandemic forced many organizations to adopt a remote work culture, due to which, many organizations faced challenges in securely authenticating remote employees accessing their data. Owing to this, many organizations are increasingly adopting this authentication method to securely authenticate and provide organization’s network access to remote employees and protect their network and data from cyber-attacks.

In the scope of work, we have included solutions offered by companies, such as HID Global Corporation, NEC Corporation, Octa, SecurEnvoy Ltd, CyberArk Software Ltd., Thales, and others.

Impact of Generative AI

Growing Demand for Enhanced Security and Behavioral Biometrics Modeling to Boost Market Growth

Generative AI can be used to create artificial data for training biometric authentication systems, such as voice or facial recognition. By generating artificial datasets, generative AI technology can help to increase the accuracy and robustness of biometric authentication systems, providing high security, and reducing the risk of unauthorized access and cyber-attacks.

For instance,

• According to an industry survey in 2021, 68% of respondents indicated that the use of generative AI technology in authentication methods could play an important role to curb phishing attacks.

Moreover, generative AI is capable of analyzing patterns in user behavior and creating behavioral biometric models for continuous authentication. By analyzing behavioral patterns via user interactions, such as mouse movements or typing patterns, generative AI can establish unique behavioral profiles for users, enabling continuous authentication without the need for explicit user input.

Passwordless Authentication Market Trends

Increasing Adoption of Web Authentication Standard Fuels Market Growth

The Web Authentication (WebAuthn) standards, developed by the Fast IDentity Online (FIDO) Alliance and World Wide Web Consortium (W3C), enable passwordless authentication on the web using a key on a mobile phone, biometrics, or other authentication methods. Web authentication is gaining significant popularity and it is widely adopted and supported by major web browsers and platforms such as Google, Apple, IBM, Microsoft, Mozilla, and Intel. WebAuthen is primarily designed to prevent cyberattacks and enhance online account security. It is a more user-friendly and secure solution compared to traditional password-based authentication methods. WebAuthen is majorly used in enterprise applications and social media applications to provide a highly secure and user-friendly authentication process for users. These factors fuel the adoption of the web authentication standard in businesses, fueling the passwordless authentication market growth over the projected timeframe.

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Passwordless Authentication Market Growth Factors

Rise in Demand for Enhanced User Experience and Improved Security Drives Market Growth

The use of traditional password-based authentication methods may lead to user frustration due to frequent password reset, forgotten passwords, and complex password setting requirements. Adoption of passwordless authentication eliminates the need for users to remember passwords, resulting in a smoother and more user-friendly authentication experience. Thus, businesses are increasingly focusing on enhancing user experience, with the use of passwordless identification methods.

Moreover, passwords are vulnerable to various cyber threats, such as brute force attacks, phishing attacks, and password reuse. Passwordless identification methods that include hardware tokens, biometrics, and cryptographic keys offer more safety and security. It reduces the risk of data breaches and unauthorized access to data. For instance,

• According to Certified Information Systems Auditor (CISA) phishing scams account for 90% of data breaches. To mitigate this problem, organizations are increasingly adopting passkeys, a phishing-resistant alternative backed by Apple, Google, Microsoft, and Amazon to enhance usability and security.

RESTRAINING FACTORS

High Implementation Cost and Privacy Concerns May Hinder Market Growth

Implementation of passwordless authentication systems, such as hardware tokens, biometric scanners, and cloud-based authentication services, requires large amounts of initial investment for hardware, software, and infrastructure upgrades. This may limit the adoption of passwordless identification systems in startups and small-sized enterprises. In addition, biometric authentication methods raise privacy concerns related to storage, collection, and use of biometric data. Organizations are required to implement security measures to protect biometric data from unauthorized access.

Passwordless Authentication Market Segmentation Analysis

By Product Type Analysis

Fingerprint Authentication Segment Held the Largest Share Due to Growing Popularity of Enhanced Security and Convenience

Based on product type, the market is divided into fingerprint authentication, face recognition, iris recognition, and others (voice recognition and smart card).

Fingerprint authentication captured the largest share of the market in 2023, as it provides a high level of security since fingerprints are unique to each individual and it is very difficult to replicate. This decreases the risk of unauthorized access compared to traditional password-based authentication methods. Additionally, this method is very convenient to use as it eliminates the need for users to remember passwords. Users can quickly and securely authenticate themselves by simply placing their finger on a fingerprint scanner. Thus, it is widely adopted by businesses globally.

Iris recognition is expected to grow at the highest CAGR during the forecast period, as it is one of the most secure biometric authentication methods available. Presence of two individuals having the same iris patterns is extremely low, which reduces the risk of unauthorized access. Moreover, iris recognition systems have high accuracy rates, False Rejection Rates (FRR), and low False Acceptance Rates (FAR). This method helps ensure that only authorized users are allowed access.

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By Authentication Type Analysis

Single-Factor Authentication Segment Dominated due to Growing Need for Cost and Complexity Savings

Based on authentication type, the market is bifurcated into single-factor authentication and multi-factor authentication.

Single-factor authentication captured the maximum market share in 2023. Implementing single-factor authentication in a passwordless authentication system can result in cost savings for organizations by reducing the need for password management infrastructure, such as password reset services and helpdesk support. Additionally, single-factor authentication may require less complex integration and deployment compared to Multi-factor Authentication (MFA) solutions.

Multi-factor authentication is expected to grow at the highest CAGR during the forecast period, as it adds an extra layer of security by requiring users to provide multiple forms of authentication, such as PIN or password via smartphones or laptops. This makes it very difficult for unauthorized individuals to gain access to sensitive systems or data, even if one factor is compromised. This can lead to improved user satisfaction and loyalty, particularly in industries where security is very important, such as government, healthcare, and finance.

By Industry Analysis

Government Segment Captured the Highest Market Share due to Increasing Focus on Enhanced Security for Sensitive Data in Government Agencies

Based on industry, the market is categorized into BFSI, government, retail & e-commerce, healthcare, IT & telecommunication, aerospace & defense, and others (transportation & logistics).

Government captured the highest market share in 2023 as government agencies often handle sensitive and classified information that requires the highest levels of security protection. Passwordless authentication systems offer advanced authentication methods, such as biometrics or hardware tokens, to ensure secure access to sensitive data and resources. Additionally, they streamline the authentication process, allowing government employees to access systems and applications more quickly and efficiently.

BFSI is expected to grow at the highest CAGR in coming years. With the rise of digital banking and mobile banking applications, passwordless authentication systems provide a secure and seamless way for customers to access their accounts and conduct transactions across multiple channels and devices. By implementing this authentication systems, BFSI organizations can reduce the number of password-related support requests, leading to cost savings and improved operational efficiency.

REGIONAL INSIGHTS

Regionally, the market is studied across Europe, North America, South America, and the Middle East & Africa.

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North America held the largest passwordless authentication market share in 2023, with the increasing number of cyberattacks, organizations in the region are prioritizing cybersecurity measures to safeguard their sensitive data and systems. Passwordless identification offers a more secure alternative to traditional password-based methods, reducing the risk of unauthorized access and data breaches. As organizations continue to prioritize security and user convenience, this authentication method is expected to become increasingly predominant across various sectors in North America. These factors play an important role in boosting the market growth in the region. For instance,

• In April 2024, Hawcx, a U.S.-based security solution provider launched a passwordless authentication platform for enterprises. This platform offers user convenience and security in an era of digital authentication.

Asia Pacific’s passwordless authentication market is anticipated to exhibit the highest CAGR over the assessment period. Many countries in the region are experiencing rapid digital transformation across various sectors, such as government, finance, retail and E-commerce, IT and telecom, and healthcare. As organizations digitize their operations and services, there is an increasing need for secure and user-friendly authentication methods, leading to a rise in popularity of passwordless identification solutions. Moreover, advancements in biometric technology and mobile authentication have made this authentication more accessible and practical for businesses in the Asia Pacific, which plays a vital role in bolstering market growth.  For instance,

• In August 2023, Secret Double Octopus expanded its partnership with Japan-based KDDI Digital Security. Through this collaboration, KDDI would incorporate Secret Double Octopus’s (Fast Identity Online 2) FIDO2-compliant passwordless identification solution into its managed security services.

Europe is anticipated to grow at a significant CAGR over the forecast period. Biometric authentication methods, such as facial recognition and fingerprint recognition, are becoming increasingly popular and reliable, making passwordless authentication more user-friendly and accessible for organizations. Further, European consumers are majorly concerned about privacy and data protection issues, particularly in the wake of high-profile data breaches and scandals. Passwordless identification methods, which do not depend on storing or transmitting passwords, play an important role in enhancing user trust in this method.

In the Middle East & Africa, prominent growth is expected during the forecast period. Some governments in the MEA region are actively promoting the adoption of digital identity solutions and passwordless authentication methods as a part of their cybersecurity strategy, which drives market growth in the region. Moreover, in South America, many countries are increasingly adopting this authentication method in their organizations as it aligns with the goals of digital transformation, providing a more secure and user-friendly authentication experience.

List of Key Companies in Passwordless Authentication Market

Leading Organizations Prioritize Acquisition and Collaboration Strategies to Expand Global Reach

Prominent companies concentrate on increasing their regional presence by displaying industry-specific services. Moreover, they are also implementing strategic initiatives to cement their market position. Key market players are continuously engaged in R&D activity to launch new solutions in the market, which would help them to increase their customer pool. Rising focus on R&D investments for product innovations is augmenting market expansion. Thus, top companies are quickly employing these strategic initiatives to withstand the market’s fierce competition.

LIST OF KEY COMPANIES PROFILED:

• HID Global Corporation (U.S.)


• NEC Corporation (Japan)


• Secret Double Octopus (U.S.)


• Fujitsu (Japan)


• Octa (U.S.)


• Duo Security (U.S.)


• SecurEnvoy Ltd (U.K.)


• CyberArk Software Ltd. (U.S.)


• Safran (France)


• Thales (France)

KEY INDUSTRY DEVELOPMENTS:

• April 2024: Center Identity, a cybersecurity company launched a patented passwordless authentication solution for businesses. It will help businesses to manage their workforce’s digital identity securely.


• November 2023: OneSpan, a security solution provider company, unveiled DIGIPASS FX1 BIO into its Digipass Authenticators product portfolio. This solution is enabled with a physical passkey and fingerprint scanner to enable organizations to enhance their digital authentication method.


• October 2023:  Thales launched a novel SafeNet IDPrime FIDO Bio Smart Card. This contactless smart card is enabled with multi-factor authentication for enterprise applications.


• December 2021: NEC Corporation developed protected biometric authentication technology that allows users to confirm their identity with encoded face information. This technology is designed to reduce the risk of misuse if biometric information is compromised, securing user identity.


• March 2021: Microsoft Corporation collaborated with HID Global Corporation developed a passwordless capability using FIDO2 (Fast Identity Online 2), security keys for enterprises across the globe.

REPORT COVERAGE

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The report provides a detailed analysis of the market and focuses on key aspects such as leading companies, product/service types, and leading applications of the product. Besides, the report offers insights into the market trends and highlights key industry developments. In addition to the factors above, the report encompasses several factors that contributed to the growth of the market in recent years.

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Report Scope & Segmentation