Out of Band Authentication Market – Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented By Authentication Method (SMS-Based OTP, Email-Based OTP, Push Notifications, Physical Tokens, Biometrics), By Application (BFSI, Healthcare, E-commerce, Government & Public Sector, Enterprise Authentication), By Deployment Model (Cloud-Based, On-Premise, Hybrid), By Region & Competition, 2020-2030F

Market Overview

Global Out of Band Authentication Market was valued at USD 2.24 Billion in 2024 and is expected to reach USD 5.29 Billion by 2030 with a CAGR of 15.40% through 2030. Global Out of Band Authentication is a security process in which a secondary verification method is used through a separate communication channel distinct from the primary access channel.

For example, when a user logs into a banking website on a computer, they may receive a unique code on their mobile device via a voice call or text message to confirm their identity. This dual-channel approach enhances security by making it significantly more difficult for attackers to gain unauthorized access, as they would need to compromise both channels simultaneously.

The need for enhanced identity verification mechanisms has driven the adoption of Out of Band Authentication across multiple industries, including banking, healthcare, e-commerce, and government sectors. Cyberattacks are becoming increasingly sophisticated and frequent, often targeting sensitive personal and financial data. In response, organizations are implementing more advanced security solutions to protect users and data integrity. Furthermore, the rise in digital transformation, remote work environments, and cloud-based platforms has increased the risk surface, necessitating more robust and resilient authentication measures. Regulatory frameworks and compliance requirements in many regions also mandate strong identity protection, further fueling market growth.

Key Market Drivers

Surge in Identity Theft and Credential-Based Breaches

The rising volume of identity theft and credential-based breaches has become one of the foremost concerns for organizations globally. Cybercriminals are increasingly targeting login credentials through phishing attacks, social engineering, and brute-force methods. Once credentials are compromised, unauthorized access to accounts, financial services, and enterprise platforms becomes easy, unless there is an added layer of verification. Out of Band Authentication addresses this vulnerability by requiring users to verify their identity through a separate communication channel, which an attacker is unlikely to control simultaneously. This capability is proving essential in industries handling sensitive data like finance, healthcare, and government services. According to the U.S. Federal Trade Commission, over 1.1 million identity theft complaints were filed in 2024, a 25% increase from the previous year. This sharp rise illustrates the growing urgency for organizations to adopt secure, layered authentication mechanisms like Out of Band Authentication to prevent unauthorized access and limit the impact of stolen credentials.

As cyber threats grow in complexity, organizations are shifting from single-layer defenses to more resilient, layered approaches. The adoption of Out of Band Authentication is a strategic response to this evolving threat landscape, offering a low-friction yet highly secure verification method. It prevents bad actors from succeeding even if login credentials are leaked. Businesses are increasingly seeing it as a long-term investment in customer trust and fraud mitigation. Enterprises with large customer bases, particularly in digital banking and e-commerce, are prioritizing Out of Band Authentication in their identity and access management frameworks.

Expansion of Mobile and Cloud-Based Digital Ecosystems

The global shift to cloud infrastructure and mobile-first services has expanded the digital ecosystem dramatically. From mobile banking to cloud enterprise resource planning systems, users now expect to access services from multiple locations and devices. This mobility increases convenience—but also broadens the threat surface. Out of Band Authentication serves as a critical security layer in this environment, enabling secure, real-time user verification via mobile phones, emails, or voice calls without depending on the original access point. It ensures that cloud and mobile access remains protected regardless of the user's location or network conditions. According to reports that mobile internet traffic accounted for over 59% of global web traffic in 2024. This shift toward mobile-first digital engagement demands strong, flexible security frameworks. Out of Band Authentication fits this need, allowing secure access to services across devices while maintaining user convenience, essential for today’s cloud-native business environments and mobile applications.

Organizations are embracing cloud-native technologies and mobile workflows not just for efficiency but also for business resilience. In such decentralized architectures, traditional password-based security fails to offer adequate protection. Out of Band Authentication aligns perfectly with zero-trust principles, allowing for adaptive, context-aware user validation. It is easily integrated with cloud identity providers and mobile app platforms, making it an attractive choice for companies building scalable, secure digital ecosystems.

Rise of Remote Work and Global Workforce Mobility

The normalization of remote work following the global health crisis has significantly altered how organizations secure access to their systems. Employees now access sensitive company data from home networks, public Wi-Fi, and personal devices. Out of Band Authentication plays a crucial role in securing these access points by confirming a user's identity through a separate, secure channel. This not only protects against credential theft but also enhances visibility into access behaviors, especially when traditional office security perimeters no longer apply. The U.S. Bureau of Labor Statistics revealed that by 2024, more than 35% of the American workforce operated remotely or under hybrid models. This trend emphasizes the need for location-independent security. Out of Band Authentication addresses this by enabling secure, identity-verified access regardless of network or device, supporting enterprise resilience in distributed work environments.

Global teams working across multiple time zones and jurisdictions require flexible and secure authentication solutions. Out of Band Authentication offers the ability to deploy seamless verification workflows without requiring employees to use physical tokens or VPN-dependent systems. As hybrid work models become the norm, organizations are investing in scalable, cloud-integrated authentication tools that are device-agnostic and user-friendly. Out of Band Authentication meets all these needs, positioning it as a strategic asset for organizations embracing the future of work.

Increasing Adoption of Customer-Centric Digital Services

As organizations compete to deliver seamless, personalized digital experiences, they must balance user convenience with robust security. Customers engaging in high-value transactions—from banking transfers to health data access—expect frictionless interactions without compromising safety. Out of Band Authentication provides a secure yet non-intrusive way to confirm identity, often through a familiar device like a smartphone. Unlike hardware tokens or knowledge-based questions, it offers quick, real-time verification that enhances both trust and user satisfaction. A 2024 survey by the Pew Research Center found that 78% of digital users preferred services offering multi-step verification, even if it added slight delays. This highlights growing customer expectations for transparent security. Out of Band Authentication strengthens trust and loyalty by providing secure interactions while maintaining the seamless digital experience customers demand.

In highly competitive digital markets, retaining customer loyalty requires more than fast service—it requires visible, transparent protection of personal data. Out of Band Authentication not only strengthens backend security but also reassures customers that their data is being handled responsibly. Enterprises that implement these systems often report reduced transaction abandonment and increased customer retention. As more consumers migrate to mobile and web channels for sensitive tasks, Out of Band Authentication has emerged as a critical component of customer experience strategy.

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Key Market Challenges

Rising Complexity in Integration with Legacy Systems

One of the most significant barriers to the widespread adoption of Out of Band Authentication technologies is the technical complexity involved in integrating these systems with existing legacy infrastructure. Many large organizations, particularly those in finance, healthcare, and government, still operate on outdated authentication protocols and information technology stacks that were not designed to accommodate modern multi-layered security architectures. Implementing Out of Band Authentication in such environments often requires extensive reconfiguration of back-end systems, the introduction of new interfaces, and potentially disruptive changes to business processes. These changes can result in high integration costs, operational delays, and resistance from internal teams who are wary of changing established procedures. As a result, even organizations with a clear understanding of the cybersecurity benefits may be reluctant to proceed due to the risk of downtime or implementation failure.

The challenge is not just technical but also organizational. Successful deployment of Out of Band Authentication requires seamless interoperability between identity providers, access management platforms, and user-facing applications. In legacy environments, these components are often siloed, fragmented, or supported by outdated vendors. Security teams may face difficulties ensuring backward compatibility, particularly in sectors where systems are not easily altered due to regulatory oversight or certification requirements. Furthermore, the complexity of aligning multiple departments—such as compliance, operations, and technology—around a unified authentication strategy can slow down the decision-making process. Without a standardized framework for integrating Out of Band Authentication into legacy environments, many organizations view it as a strategic challenge that requires extensive planning, specialized expertise, and considerable resource commitment. As a result, enterprises may delay or limit their deployment of such systems, restricting the overall growth trajectory of the global market.

User Experience and Authentication Fatigue

Another critical challenge impacting the adoption of Out of Band Authentication is the growing concern around user experience and authentication fatigue. While these technologies are highly effective in enhancing security, they often introduce friction into the user journey, particularly when secondary verification methods are perceived as time-consuming or repetitive. For example, users who are required to validate their identity through a separate communication channel—such as receiving a text message or answering a phone call—may find the process intrusive or cumbersome, especially when repeated frequently across multiple services. This negative perception can lead to decreased user satisfaction, lower platform engagement, and in consumer-facing businesses, increased abandonment rates during login or transaction processes. Organizations are now facing the difficult task of balancing robust security with seamless digital experiences, particularly as users grow increasingly intolerant of disruptions in their workflows.

This challenge is particularly relevant in high-volume environments such as online banking, retail e-commerce, and enterprise software-as-a-service platforms, where user convenience is tightly linked to brand loyalty and operational efficiency. While Out of Band Authentication remains a powerful tool for mitigating fraud, it must be implemented in a way that minimizes friction. This requires intelligent authentication flows that evaluate risk in real-time and selectively trigger Out of Band mechanisms only when anomalies are detected. However, deploying such adaptive systems demands advanced analytics, behavioral profiling, and integration with machine learning algorithms—resources that may be beyond the reach of small and medium-sized enterprises. Additionally, businesses must educate users on the value and necessity of these authentication methods to mitigate resistance and promote adoption. Without careful user experience design and communication strategies, even well-intentioned security measures can become a source of frustration, undermining trust and adoption. As user expectations continue to evolve toward fast, intuitive, and secure experiences, this tension between convenience and protection will remain a persistent challenge in the growth of the global Out of Band Authentication market.

Key Market Trends

Shift Toward Biometric-Integrated Out of Band Authentication

Biometric technologies are rapidly becoming integral to Out of Band Authentication systems. Instead of relying solely on one-time passcodes or voice calls, organizations are integrating fingerprint, facial recognition, and voice biometrics into the second factor of authentication. This trend reflects a growing desire to reduce friction for users while enhancing the reliability and uniqueness of identity verification methods. Since biometrics are inherently difficult to replicate or steal, they provide a more secure and user-friendly experience. This is particularly valuable in mobile environments where users prefer fast, seamless interactions with minimal manual input.

This shift is not limited to consumer-facing applications. Enterprises are also adopting biometric-integrated Out of Band Authentication for internal access controls and remote employee verification. By combining biometric validation with device-based push notifications or app-based challenges, organizations can ensure both possession and inherent identity factors are verified. As biometric sensors become standard in smartphones and laptops, the cost and complexity of deploying biometric-based authentication have declined, making it more accessible to companies of all sizes. This trend is reshaping how businesses approach multi-factor authentication, with a greater focus on convenience, trust, and precision in identity validation.

Increased Demand for Cloud-Native and API-Driven Authentication Solutions

Organizations are increasingly shifting toward cloud-native identity security architectures, and Out of Band Authentication solutions are evolving accordingly. Modern businesses demand authentication systems that are easy to deploy, integrate across cloud platforms, and scale alongside growing digital infrastructure. Cloud-native Out of Band Authentication solutions offer seamless integration via application programming interfaces, enabling rapid deployment across multiple channels including mobile apps, web portals, and third-party platforms. This shift addresses the need for agility and flexibility in today’s fast-paced digital economy.

API-driven Out of Band Authentication platforms are particularly attractive to developers and system integrators who seek control, customization, and fast time-to-market. These platforms offer plug-and-play capabilities, support for microservices, and compatibility with identity-as-a-service solutions. The trend aligns with broader digital transformation initiatives where businesses are decomposing monolithic systems into modular, service-oriented architectures. Out of Band Authentication that is cloud-native and API-accessible allows security teams to adapt to evolving user behaviors, integrate with business applications, and deploy security logic dynamically—without compromising performance or scalability.

Convergence of Identity and Access Management with Zero Trust Architecture

The global shift toward Zero Trust security frameworks has significantly influenced the trajectory of Out of Band Authentication. In a Zero Trust model, no user or device is trusted by default, even if they are inside the organizational network. Identity and access management becomes a central pillar, and Out of Band Authentication plays a critical role in enforcing granular, just-in-time access controls. By requiring identity verification through a separate channel at various checkpoints—such as device login, application access, or privileged action requests—Out of Band Authentication aligns with the core principles of Zero Trust.

This convergence is driving investment in authentication systems that are deeply integrated with access policies, endpoint security, and user behavior analytics. Out of Band Authentication is no longer viewed as a standalone add-on but as an embedded function within holistic identity and access management platforms. Enterprises implementing Zero Trust architectures are prioritizing adaptable, policy-driven Out of Band Authentication that can enforce conditional access rules and prevent lateral movement within networks. As more organizations move toward Zero Trust maturity, the demand for context-rich, continuous authentication methods is expected to rise, positioning Out of Band Authentication as a foundational layer in the security stack.

Segmental Insights

By Authentication Method Insights

In 2024, the SMS-based OTP segment emerged as the dominant authentication method in the Global Out of Band Authentication Market. This dominance can be attributed to its widespread accessibility, low implementation cost, and compatibility with virtually all mobile devices. Organizations across sectors—especially banking, financial services, and e-commerce—continued to rely heavily on SMS-based OTPs due to their ease of deployment and familiarity among users. As a method that does not require advanced hardware or software, SMS-based OTPs remain a go-to solution for businesses looking to enhance security without overhauling their existing systems.

Despite the emergence of newer and more secure methods such as biometrics and push notifications, SMS-based OTPs are expected to maintain their lead over the forecast period. This is largely due to their universal reach—especially in developing and underbanked regions where smartphone penetration and internet reliability are still evolving. SMS-based OTPs work across both smartphones and feature phones, making them ideal for large-scale, cross-regional implementations. Their reliability in delivering timely authentication codes and the low learning curve for end users also contribute to sustained market preference, particularly among institutions seeking high adoption rates with minimal user education.

However, it is important to note that while SMS-based OTPs lead in volume and deployment, other methods such as push notifications and biometrics are gaining traction in high-security environments and among tech-savvy user bases. These alternatives are likely to grow rapidly in share, especially in developed markets with strong mobile infrastructure and advanced identity management systems. Nevertheless, the scalability, simplicity, and infrastructure independence of SMS-based OTPs make them the dominant and most resilient segment in the Global Out of Band Authentication Market for both the current landscape and the near future.

By Deployment Model Insights

In 2024, the cloud-based deployment model dominated the Global Out of Band Authentication Market and is projected to maintain its lead during the forecast period. This dominance is driven by the rising demand for scalable, cost-efficient, and easily deployable authentication solutions, particularly among organizations undergoing digital transformation. Cloud-based models offer flexibility, real-time updates, and seamless integration with modern applications and identity management platforms, making them ideal for enterprises operating in remote or hybrid environments. Additionally, the increasing adoption of Software-as-a-Service platforms and the growing need to secure mobile and cloud-native applications further solidify the position of cloud-based deployments as the preferred choice for both large enterprises and small to medium-sized businesses seeking agility and security.

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Regional Insights

Largest Region

In 2024, North America firmly established itself as the leading region in the Global Out of Band Authentication Market, driven by its advanced technological infrastructure, strong regulatory environment, and widespread digital transformation across industries. The region’s early adoption of cybersecurity solutions, particularly in the financial services, healthcare, and government sectors, has created a favorable landscape for robust authentication technologies. Enterprises across the United States and Canada increasingly deployed Out of Band Authentication to combat sophisticated cyber threats and comply with stringent data protection regulations such as the Health Insurance Portability and Accountability Act and the Gramm-Leach-Bliley Act.

North American organizations have shown a high level of maturity in identity and access management strategies, integrating Out of Band Authentication with cloud platforms, biometric tools, and Zero Trust security frameworks. The presence of leading cybersecurity vendors, a tech-savvy user base, and high smartphone penetration further accelerated the adoption of mobile-based Out of Band methods, such as push notifications and SMS-based one-time passwords. As investment in digital infrastructure continues and regulatory scrutiny intensifies, North America is expected to maintain its dominance in the Out of Band Authentication Market throughout the forecast period.

Emerging Region

In 2024, South America rapidly emerged as a high-potential growth region in the Global Out of Band Authentication Market, driven by rising cyber threats, expanding digital banking services, and increasing regulatory focus on data protection. Countries such as Brazil, Argentina, and Colombia experienced accelerated adoption of digital platforms, prompting businesses to implement stronger user authentication frameworks. The growing use of smartphones and mobile internet across the region has further supported the uptake of SMS-based and push notification-based authentication solutions. Additionally, government initiatives promoting cybersecurity awareness and investment in digital infrastructure are expected to sustain this momentum, positioning South America as a key emerging market in the years ahead.

Recent Developments

• In January 2025, Entrust enhanced its Identity as a Service (IDaaS) platform by incorporating artificial intelligence-driven facial biometric authentication. The solution securely stores encrypted biometric identifiers locally on user devices, enabling phishing-resistant, step-up authentication for high-value transactions. This advancement aims to improve both security and user experience by providing a robust, device-bound verification method.
• In October 2024, Okta collaborated with the OpenID Foundation and other stakeholders to co-found a working group focused on developing the Interoperability Profile for Secure Identity in the Enterprise (IPSIE). This new open standard is designed to streamline and standardize the secure integration of authentication services across enterprise applications, enhancing interoperability and strengthening identity management frameworks.
• In April 2024, Entrust completed the acquisition of Onfido and subsequently launched an enhanced authentication platform. This integrated solution combines Onfido’s advanced artificial intelligence-driven document and biometric identity verification capabilities with Entrust’s Identity as a Service offering. The initiative aims to strengthen defenses against emerging threats such as deepfakes, phishing attacks, and account takeovers across digital identity ecosystems.

Key Market Players

• Broadcom Inc.
• Thales S.A.
• RSA Security LLC
• Entrust Corporation
• Ping Identity Holding Corp.
• Okta, Inc.
• Micro Focus International plc
• OneSpan Inc.

Report Scope:

In this report, the Global Out of Band Authentication Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• Out of Band Authentication Market, By Authentication Method:

o   SMS-Based OTP

o   Email-Based OTP

o   Push Notifications

o   Physical Tokens

o   Biometrics    

• Out of Band Authentication Market, By Application:

o   BFSI

o   Healthcare

o   E-commerce

o   Government & Public Sector

o   Enterprise Authentication

• Out of Band Authentication Market, By Deployment Model:

o   Cloud-Based

o   On-Premise

o   Hybrid

• Out of Band Authentication Market, By Region:

o   North America

§  United States

§  Canada

§  Mexico

o   Europe

§  Germany

§  France

§  United Kingdom

§  Italy

§  Spain

o   Asia Pacific

§  China

§  India

§  Japan

§  South Korea

§  Australia

o   Middle East & Africa

§  Saudi Arabia

§  UAE

§  South Africa

o   South America

§  Brazil

§  Colombia

§  Argentina

Competitive Landscape

Company Profiles: Detailed analysis of the major companies present in the Global Out of Band Authentication Market.

Available Customizations:

Global Out of Band Authentication Market report with the given market data, TechSci Research offers customizations according to a company's specific needs. The following customization options are available for the report:

Company Information

• Detailed analysis and profiling of additional market players (up to five).

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