Industry trends and developments in passwordless authentication
Tags: cybersecurity, authentication, industrytrends, passwordless
Published: 2023-04-18 14:23:28

**Passwordless authentication is a rapidly developing trend that aims to eliminate passwords by using biometric data, security keys, and one-time codes for a stronger and more convenient authentication process. Major tech companies are adopting passwordless authentication, and industry standards are emerging to ensure secure implementation.**


Passwordless authentication is a new paradigm in the authentication industry that offers several benefits compared to traditional password-based authentication methods.

In this blog post, we will explore the latest industry trends and developments in passwordless authentication and provide insights on how these trends will impact the industry and your SaaS solution.

 **Trend #1: Increased Adoption of Passwordless Authentication**

Passwordless authentication is gaining traction among businesses of all sizes and industries. The trend of increased adoption of passwordless authentication is not limited to large and midsize enterprises, as small businesses are also beginning to see the benefits of this technology. Passwordless authentication is a versatile solution that can be implemented in various industries, including healthcare, eCommerce, finance, education, and government.

This adoption is due to the improved security, ease of use, and cost-effectiveness that passwordless authentication offers compared to traditional password-based authentication methods. Passwordless authentication methods such as biometrics, security keys, and one-time passcodes provide an extra layer of security without compromising user experience.

In addition to the Gartner report, other industry analysts have predicted similar trends in passwordless authentication adoption. For example, a report by MarketsandMarkets predicts that the global passwordless authentication market will grow from USD 1.2 billion in 2020 to USD 3.8 billion by 2025, at a Compound Annual Growth Rate (CAGR) of 25.6%. This growth is driven by the increasing demand for secure and user-friendly authentication methods.


 **Trend #2: Magic Link**

A magic link is a type of passwordless authentication method that allows users to log in to their accounts by clicking on a unique link sent to their email address or mobile phone. With a magic link, users don’t have to remember complex passwords or go through a lengthy authentication process. Instead, they simply click on the link, which authenticates their identity and grants them access to their account. Magic links are becoming more popular in the passwordless authentication industry due to their ease of use and convenience. They are also more secure than traditional passwords since they are generated for a single use and expire after a set period of time.

Magic link adoption has been steadily increasing in recent years, particularly in the SaaS and eCommerce industries. As businesses look for ways to improve their security while also providing a seamless user experience, magic links have become an attractive solution.

Some major companies, such as Slack, Dropbox, and Medium, have already implemented magic links for authentication. The rise of mobile devices and the increasing use of email and messaging apps have also contributed to the growth of magic link adoption.

In terms of development trend, there are several companies that are working to improve the magic link authentication process. For example, some are developing machine learning algorithms to better detect fraudulent login attempts, while others are exploring the use of blockchain technology for added security. Additionally, some companies are integrating magic links with other authentication methods, such as biometric authentication, for a more secure and seamless authentication process.

 **Trend #3: Biometric Authentication**

Biometric authentication has gained popularity in recent years, especially in the mobile device market. According to a report by Grand View Research, the global biometric authentication market was valued at $14.5 billion in 2020 and is expected to grow at a compound annual growth rate of 15.6% from 2021 to 2028. The report also highlights that the adoption of biometric authentication is driven by the need for enhanced security and convenience in various sectors, including the government, healthcare, finance, and eCommerce industries.

In fact, the eCommerce sector is expected to witness significant growth in biometric authentication adoption due to the rising demand for seamless and secure online transactions. For example, a study by Juniper Research estimates that the use of biometric authentication in eCommerce will reach over 2 billion users by 2023, representing a five-fold increase from 2018.

 **Trend #4: Multi-Factor Authentication**

Multi-factor authentication (MFA) is a crucial aspect of the passwordless authentication landscape, as it adds an extra layer of security to the login process. According to a report by MarketsandMarkets, the global MFA market size is projected to grow from $11.1 billion in 2020 to $23.5 billion by 2025, at a Compound Annual Growth Rate (CAGR) of 16.2%.

This growth can be attributed to the increasing number of cyberattacks and data breaches across various industries, driving the adoption of MFA as a security measure. Additionally, MFA is becoming more user-friendly and affordable, leading to its widespread adoption in the SaaS and eCommerce industries. The most common MFA methods used by businesses include SMS-based authentication, push notifications, biometric authentication, and security keys.

 **Trend #5: FIDO2 Standards**

FIDO2 is gaining popularity in the passwordless authentication industry because it provides a more secure and convenient authentication process. According to a report by MarketsandMarkets, the global passwordless authentication market is expected to grow from $1.2 billion in 2020 to $2.4 billion by 2025, with FIDO2 being one of the key drivers of this growth. The report also suggests that the demand for FIDO2-based authentication solutions is increasing due to the rise in cyber threats, data breaches, and the need for a more secure and convenient authentication process. FIDO2-based authentication solutions are being implemented by various industries, including SaaS and eCommerce, to improve security and user experience for their customers.

 **Trend #6: Zero Trust Security**

Zero Trust Security is a holistic approach to security that goes beyond traditional perimeter-based security models. It operates on the principle of “never trust, always verify” and assumes that no user or device should be trusted, regardless of their location or context. In Zero Trust Security, access controls are based on a combination of factors, including the user’s identity, device information, location, and behavior.

Passwordless authentication is a key component of the Zero Trust Security model, as it eliminates the need for passwords, which are often the weakest link in a security chain. By using passwordless authentication methods such as biometrics, security keys, or one-time passcodes, Zero Trust Security can provide a more secure authentication process, reducing the risk of data breaches and compromised accounts.

Zero Trust Security has become increasingly popular in recent years, with more and more organizations adopting the approach. According to a survey by Cybersecurity Insiders, 72% of organizations plan to implement a Zero Trust Security model by 2023. The same survey found that passwordless authentication is the top security technology that organizations are planning to implement as part of their Zero Trust Security strategy.

## **Why Passwordless is getting Popular in SaaS and eCommerce Industry**

Passwordless authentication is becoming increasingly popular among SaaS and eCommerce businesses due to the many benefits it offers over traditional password-based authentication methods. Here are some of the reasons why passwordless authentication is gaining traction in these industries:

**Improved Security:**

Passwordless authentication offers a significant improvement in security compared to traditional password-based authentication methods. Passwords can be easily guessed, stolen or shared, making them the weakest link in the security chain. Hackers can use brute-force attacks or phishing schemes to gain access to passwords, which can then be used to compromise user accounts and steal sensitive data.

Passwordless authentication methods eliminate the need for passwords and instead rely on more secure authentication mechanisms such as one-time passcodes, magic links, biometrics or security keys. One-time passcodes and magic links are sent directly to a user’s email or phone, allowing them to log in without needing to remember a password. Biometric authentication, such as fingerprint or facial recognition, uses unique physical characteristics of the user to verify their identity. Security keys are physical devices that the user must possess to authenticate themselves, adding an extra layer of security.

By eliminating passwords and adopting these more secure authentication methods, passwordless authentication can reduce the risk of data breaches and compromised accounts.

**Enhanced User Experience:**

In addition to improved security, passwordless authentication also offers an enhanced user experience. Traditional password-based authentication methods often require users to create and remember complex passwords, leading to frustration and confusion. Users may forget their passwords or need to reset them frequently, leading to increased support costs for businesses.

Passwordless authentication eliminates the need for passwords and replaces them with more user-friendly authentication methods such as biometrics, one-time passcodes, or security keys. These methods require less effort from users and are generally quicker and easier to use. For example, biometric authentication simply requires a user to provide a fingerprint or facial recognition scan, which is much faster and more convenient than typing in a long and complex password.

The improved user experience provided by passwordless authentication can lead to increased user adoption and satisfaction, which is particularly important for SaaS and eCommerce businesses. In these industries, customer satisfaction is crucial to maintaining customer loyalty and repeat business. By offering a more user-friendly login experience, businesses can reduce friction and frustration for users, leading to increased customer satisfaction and loyalty.

**Cost-Effectiveness:**

In addition to improved security and enhanced user experience, another key benefit of passwordless authentication is cost-effectiveness. Password management can be a significant cost for businesses, particularly for those in the SaaS and eCommerce industries that rely heavily on digital authentication.

Password-related support and maintenance can be time-consuming and costly for businesses, especially when considering the costs associated with resetting forgotten passwords, managing secure password storage, and other related tasks. With passwordless authentication, businesses can eliminate these costs entirely, as there are no passwords to manage or reset.

Moreover, the cost savings associated with passwordless authentication can be significant, especially for larger enterprises. Gartner estimates that password reset support calls account for 20% to 50% of all help desk calls. By adopting passwordless authentication methods, such as biometrics or security keys, businesses can reduce the volume of help desk calls and support tickets related to password management, leading to significant cost savings.

In addition to cost savings related to support and maintenance, passwordless authentication can also help businesses reduce the risk of costly data breaches and security incidents. The cost of a data breach can be significant, with the average cost per record compromised estimated to be $150. By adopting passwordless authentication, businesses can reduce the risk of data breaches and their associated costs.

**Compliance:**

In addition to the benefits of improved security, enhanced user experience, and cost-effectiveness, compliance is another important driver of passwordless authentication adoption among SaaS and eCommerce businesses.

Regulations such as GDPR or HIPAA require higher levels of security and data protection, particularly when it comes to user authentication. Traditional password-based authentication methods may not be sufficient to meet these regulatory requirements, as they can be vulnerable to various security threats and data breaches.

Passwordless authentication can help businesses comply with these regulations by providing a more secure authentication process that is less susceptible to attack. For example, biometric authentication methods, such as facial recognition or fingerprint scanning, can provide a higher level of security than traditional passwords.

In addition, many passwordless authentication methods comply with industry standards and best practices for security and data protection. By adopting passwordless authentication methods, SaaS and eCommerce businesses can not only improve security and user experience but also ensure compliance with regulations and industry standards. This can help to build trust with customers and partners, which can be a valuable asset in today’s competitive business landscape.

Furthermore, passwordless authentication can help businesses avoid the costly consequences of data breaches and other security incidents. These consequences can include not only financial losses but also reputational damage, loss of customer trust, and legal liabilities

**Convenience:**

The convenience factor of passwordless authentication is also a significant driver of its adoption in the SaaS and eCommerce industries. With passwordless authentication, users can access their accounts with a simple, one-click authentication process, eliminating the need to remember and enter complex passwords. This can be especially beneficial for users who access their accounts from multiple devices or locations, as it allows them to seamlessly switch between devices without the need to re-enter passwords.

In addition, passwordless authentication methods such as biometrics, such as fingerprints or facial recognition, can offer an even greater level of convenience and speed for users. For example, a customer can use their face or fingerprint to quickly and securely access their account and make purchases on an eCommerce website, without the need to enter a username and password.

By offering a more convenient login experience, businesses can improve customer satisfaction and retention. This can translate into increased revenue and a stronger competitive position in the market. As a result, many businesses are turning to passwordless authentication as a way to improve the overall user experience and build a loyal customer base.

SaaS and eCommerce businesses are adopting passwordless authentication in different ways. For example, eCommerce businesses are using biometric authentication for faster and more secure checkout experiences. Similarly, SaaS businesses are implementing passwordless authentication to improve security and user experience for their customers. With more passwordless authentication methods becoming available, such as FIDO2, we can expect to see even more businesses adopting this technology in the future.

## **Impact of Passwordless Authentication on SaaS and eCommerce Businesses**

Passwordless authentication is transforming the way SaaS and eCommerce businesses approach security and user experience. The adoption of passwordless authentication is driven by the many benefits it offers, including enhanced security, user experience, cost-effectiveness, compliance, and convenience. Biometric authentication is increasingly used in eCommerce for faster and more secure checkout experiences, while SaaS businesses are implementing passwordless authentication to improve security and user experience.

Passwordless authentication reduces the cost of password management and helps businesses comply with regulations such as GDPR or HIPAA. Overall, passwordless authentication is becoming the new standard for secure and user-friendly authentication in SaaS and eCommerce.

Here are some data and stats on passwordless authentication adoption in the SaaS and eCommerce industry:

1. According to a 2021 survey by Auth0, 57% of SaaS companies have implemented passwordless authentication methods, and 77% of those that haven’t yet are planning to do so in the future.

2. A 2020 survey by Payment Gateway Provider, Adyen, found that 83% of shoppers prefer biometric authentication over traditional passwords for online payments.

3. According to the same Adyen survey, the use of biometric authentication/passwordless authentication in eCommerce has increased by 30% in the past year.

4. Research by PwC shows that 69% of consumers would prefer to use biometric authentication methods such as fingerprint recognition, facial recognition, or voice recognition to access their accounts.

These statistics highlight the growing adoption of passwordless authentication in the SaaS and eCommerce industry and the increasing preference of users for more convenient and secure authentication methods.

## **Conclusion**

Passwordless authentication is an exciting development in the authentication industry. The trends we discussed above show that passwordless authentication is gaining popularity due to its security, convenience, and cost-effectiveness. SaaS providers need to adopt these trends to remain competitive and provide the best user experience to their customers. Biometric authentication, MFA, FIDO2 standards, and zero trust security are some of the trends that are shaping the passwordless authentication industry. As the industry continues to evolve, we can expect to see even more developments in passwordless authentication.