The passwordless authentication market is estimated to be valued at USD 19.14 Bn in 2024 and is expected to reach USD 52.33 Bn by 2031. It is projected to grow at a compound annual growth rate (CAGR) of 15.45% from 2024 to 2031. The passwordless authentication market is driven by the increasing instances of high-profile security breaches and growing regulatory pressure on organizations to secure access.

Market Driver - Increasing Cybersecurity Threats Driving Demand for Stronger Authentication

As enterprises adopt digital transformation strategies and move operations and services online, the exposure of businesses and individuals to cyber threats has increased manifold. Advanced hacking methods such as phishing scams and credential stuffing attacks attempt to steal user login credentials by exploiting human errors or technical vulnerabilities. These traditional cybercrimes have evolved rapidly alongside technological evolution and are becoming significantly more sophisticated.

The growing damages incurred due to such identity thefts and account takeovers have pushed organizations across industries to strengthen their authentication systems. With passwords no longer considered sufficiently secure due to the mentioned threats, companies are exploring advanced passwordless authentication methods.

Biometric login options using fingerprints, facial recognition or iris scanning are gaining traction due to their convenience and ability to uniquely identify individuals. Behavioral biometrics that analyze typing patterns or gestures are also emerging as highly secure passwordless authentication alternatives. The imperative to boost security in today's digital landscape without compromising convenience is a key driver propelling growth of the passwordless authentication market.

Market Driver - Rising Adoption of Biometric Technologies

Advances in artificial intelligence and machine learning have enabled significant progress in biometric technologies in recent times. From niche applications, biometric modalities are finding widespread adoption across various industry verticals driven by their enhanced security and user-friendliness. Consumer-facing industries like banking, retail, and travel have especially emerged as early adopters of biometric, passwordless authentication systems at physical locations and digital platforms.

Touchless biometrics leveraging facial recognition and other contactless biomarkers have gained strong demand amid the ongoing pandemic, enabling touch-free commerce without compromising verification. In manufacturing, biometric time & attendance and access control using fingerprint or iris scans have improved workforce management and security. Governments worldwide are increasingly mandating digital ID programs utilizing biometric identifiers for welfare distributions, driving adoption. Growth in use of biometric modalities for passwordless multi-factor authentication on employee and customer-facing applications is also being witnessed across sectors.

Widespread biometric identity programs and touchless verification solutions deployed during the pandemic are expected to endure as consumer acceptance of biometrics strengthens. Convenience, security concerns as well as regulatory initiatives are compelling factors propelling widespread biometric usage and greater demand for passwordless authentication market.

Market Challenge - High Initial Implementation Costs for SMEs

One of the major challenges currently faced in the passwordless authentication market is the high initial implementation costs, especially for small and medium-sized enterprises (SMEs). Transitioning to a completely passwordless authentication system requires significant upfront investments in upgrading existing IT infrastructure and training employees on new authentication protocols.

This includes purchasing new smartphones, biometric devices, security keys, setting up single sign-on platforms, and integrating authentication systems with existing applications and databases. For cost-sensitive SMEs, such large capital expenditures pose significant financial constraints that discourage adoption of passwordless authentication technologies. Additionally, SMEs have smaller user bases for distributing implementation costs.

With a lack of in-house expertise, they also have to hire external consultants for installation and configuration of passwordless authentication systems. This further increases initial costs. High setup costs act as a roadblock for widespread adoption of passwordless authentication methods, particularly among the large demographic of SMEs worldwide.

Market Opportunity - High Investment in Next-generation Secure Authentication Technologies

One major opportunity in the passwordless authentication market is the high level of investment being made in next-generation secure authentication technologies. Cybersecurity risks continue rising with digital transformation. So, there is growing recognition among enterprises, technology leaders, and investors of the need for advanced identity verification beyond passwords. This has driven significant capital inflows into developing novel biometric, behavioral, and contextual authentication solutions without compromising user experience.

Leading tech giants are pouring billions into refining fingerprint scanning, facial recognition, voice identification, keyless security tokens and other passwordless authentication means. Considerable R&D investments are accelerating commercialization of superior passwordless authentication options. Growing awareness and availability of advanced technologies is convincing more organizations to implement passwordless systems for fortified login security and identity assurance.

Promoting Convenience: Many players have focused on promotions around how their passwordless solutions provide a more seamless and frictionless user experience compared to passwords. Companies in the passwordless authentication market like Google, Microsoft and Okta have heavily marketed their solutions as making sign-ins fast, easy and hassle-free.

Leveraging Biometrics: Major players like Apple and Samsung have leveraged their expertise in biometric technology like fingerprints and facial recognition to drive passwordless authentication market.

Partnering with developers: FIDO Alliance and other standards groups have actively collaborated with developers to integrate passwordless APIs into websites, applications and devices. Partnerships between FIDO, MasterCard, Microsoft and others in 2020-21 led to passwordless checkouts being optionally available on over 5,000 online stores within a year, driving significant new customer signups.

Bundling with other products: Companies like Amazon have bundled passwordless sign-in options along with popular paid services like Prime to attract more users. Over 15 million Prime members reportedly enabled Amazon's passwordless authentication in 2021 alone due to its frictionless experience integrated with their payments.

Insights, By Type: Personalized and Convenient Identification Drives Fingerprint Authentication Adoption

In terms of type, fingerprint authentication contributes 38.7% share of the passwordless authentication market owning to its personalized and convenient identification capabilities. Fingerprints are unique to every individual and can easily and quickly identify users without remembering passwords. As fingerprint data is biometric and cannot be shared, stolen or guessed, it offers strong security compared to textual passwords. Fingerprint authentication also ensures frictionless login experiences across devices and platforms. Its seamless one-touch authentication on smartphones and laptops have made it a preferred choice among consumers wanting secure and hassle-free access.

Furthermore, continual technological developments have improved fingerprint sensors' accuracy rates and large-scale deployment has optimized authentication speeds. These advantages have spurred several organizations, particularly financial institutions and e-commerce platforms, to integrate fingerprint login, driving its widespread adoption in the passwordless authentication market.

Insights, By Authentication Type: Ubiquitous Usage Fuels One Time Password as Leading Authentication Method

In terms of authentication type, one time password (OTP) contributes 32.2% share of the passwordless authentication market in 2024. This is due to its ubiquitous usage across industries for multi-factor passwordless authentication. OTPs provide an additional layer of security beyond traditional username-password combinations. The login process involves generating a single-use random numerical code that is valid for a short period of time, usually 30 seconds.

As OTP generation does not require dedicated hardware, it can be easily implemented into existing authentication architectures. Its minimal setup and operational costs have led to OTPs being commonly used for high-risk transactions, password recovery functions, and employee access. Moreover, regulations like two-factor authentication for banking and finance domain have accelerated OTP adoption in the passwordless authentication market.

Insights, By Deployment Mode: Advantages over On-Premise Drive Cloud Deployment Preference

In terms of deployment mode, Cloud contributes the highest share of the passwordless authentication market owing to its various advantages over on-premise solutions. Cloud-based passwordless authentication requires no upfront infrastructure investment and allows scaling capacities up or down as user traffic fluctuates. It offers a pay-as-you-go model with minimal maintenance overhead.

Cloud platforms also provide automatic firmware updates and patching to keep systems secure. These on-demand, elastic qualities are appealing to organizations wanting to reduce capital expenditure. Furthermore, the Cloud enables applications to be accessed from any internet-connected device, improving workforce mobility, and productivity.

Its centralized management and monitoring capabilities also facilitate compliance with security policies. These benefits have increased preference for Cloud-hosted authentication, contributing to its high passwordless authentication market share.

• Industries with high user interaction, such as BFSI and retail, are increasingly adopting passwordless authentication solutions to reduce helpdesk costs associated with password resets.
• Additionally, a notable statistic is the anticipated acceleration of implementation in developing regions as cybersecurity frameworks evolve. This steady rise in adoption is underlined by the growing preference for biometric systems due to their ease of use, increased accuracy, and robust fraud prevention measures.
• As data protection legislation tightens worldwide, organizations will be compelled to migrate toward passwordless frameworks, driving both awareness and tangible growth in the passwordless authentication market.

The major players operating in the passwordless authentication market include Microsoft Corporation, Google LLC (Alphabet), IBM Corporation, Thales Group, HID Global Corporation, Fujitsu Limited, NEC CORPORATION, Okta, Inc., Secret Double Octopus (SDO), Cognitec Systems GmbH, Ping Identity, Yubico Inc., Duo Security (Cisco), OneLogin (One Identity), HYPR Corp., Trusona Inc., IDEMIA (formerly known as OT-Morpho), and Privy, formerly PrivyID.