Passwordless Authentication Market Size, Share and Trends 2024 to 2034

Passwordless Authentication Market Size and Forecast 2024 to 2034

The global passwordless authentication market size is worth around USD 19.14 billion in 2024 and is anticipated to reach around USD 82.50 billion by 2034, growing at a CAGR of 15.73% from 2024 to 2034. The passwordless authentication market growth is attributed to the increasing need for secure, seamless authentication solutions.

Passwordless Authentication Market Key Takeaways

• North America dominated the global market with the largest market share of 40% in 2023.
• Asia Pacific is anticipated to witness the fastest growth during the forecasted years.
• By type, the fingerprint or thumbprint authentication segment contributed the highest market share in 2023.
• By type, the authentication using face recognition segment is expected to grow at the fastest CAGR during the forecast period. 
• By authentication type, the multi-factor segment captured the biggest market share in 2023.
• By authentication type, the single factor segment is anticipated to grow with the highest CAGR from 2024 to 2034.  
• By industry vertical, in 2023, the BFSI segment led the global market. 
• By industry vertical, the healthcare segment is projected to expand rapidly during the forecast period.

Impact of Artificial Intelligence (AI) on the Passwordless Authentication Market

Artificial intelligence fuels the advancements in the passwordless authentication market that secure access technologies are experiencing by advocating for biometric authentication, behavioral analysis, and risk-adaptive security. AI allows systems to efficiently process large amounts of data instantaneously and detect anomalous login patterns, or threats to security. This improves the strength of the authentication techniques while minimizing the use of passwords. Moreover, AI identity authentication is expected to prove key as businesses seek to strengthen cybersecurity, thus extending the use of sophisticated security structures with coping issues such as theft of credentials and identity fraud.

U.S. Passwordless Authentication Market Size and Growth 2024 to 2034

The U.S. passwordless authentication market size is evaluated at USD 5.36 billion in 2024 and is projected to be worth around USD 23.56 billion by 2034, growing at a CAGR of 15.94% from 2024 to 2034.

North America dominated the global passwordless authentication market in 2023, due to the rising security threats, and the wider uptake of hi-tech means of accreditation in the region. Especially in the U.S., where businesses are already spending significantly on passwordless authentications and other security solutions against the growing cyber threat. Moreover, the growth of passwordless authentication is also backed by the government; programs such as the National Institute of Standards and Technology (NIST) Cybersecurity Framework further fuel the market in this region.

• The average weekly cyberattacks in this region have risen by 52%, according to statistics from STATIONX LTD, a leading cybersecurity solutions provider.

Asia Pacific is projected to host the fastest-growing passwordless authentication market in the coming years, owing to the rise in investments in cybersecurity leading to the adoption of passwordless solutions. China, India, and Japan as the countries that are ready to invest in advanced authentication technologies, as the increasing digitalization and the high level of cyber threats. The popularity of e-commerce, mobile payments, and cloud applications in the region has increased the need for trusted authentication solutions. Furthermore, the emergence in governmental and corporate consciousness of reliably secure solutions especially in highly endangered areas is likely to boost this growth.

Market Overview

Passwordless authentication which is a security method based on particular standards, including FIDO (Fast Identity Online) is gradually recognized as vital in the field of cyber security, especially in the context of the most widespread and dangerous threat. This shift has grown greatly due to the weaknesses brought about by the use of passwords and matters arising from the use of passwords which include password reuse on various platforms. The passwordless authentication market solutions, such as biometrics or hardware keys are purposely built to withstand phishing attacks and deliver more secure meaningful interactions.

Passwordless Authentication Market Growth Factors

• Increasing cybersecurity threats: The rise in cyberattacks, especially phishing and credential stuffing, is driving demand for more secure authentication methods.
• Rising adoption of biometric technology: The growing acceptance of biometric systems like fingerprint and facial recognition is fueling the demand for the passwordless authentication market.
• Supportive government regulations: Strict regulations and standards, such as GDPR and NIST guidelines, are compelling organizations to adopt more secure authentication measures.
• Surge in digital transformation: Companies rapidly adopting digital platforms require secure and efficient authentication solutions, boosting the market for passwordless authentication.
• Cloud adoption: The growing reliance on cloud-based systems has increased the need for seamless and secure authentication solutions.
• Improved user experience: Passwordless authentication provides a smoother user experience, contributing to its widespread adoption across industries.
• Growth of mobile payments: The increasing use of mobile devices for financial transactions is driving the need for secure, passwordless authentication methods in the financial sector.

Market Scope

Market Dynamics

Driver

Increasing demand for enhanced cybersecurity measures

Increasing demand for enhanced cybersecurity measures is projected to drive the adoption of the passwordless authentication market solutions. The ISC2’s 2024 study showed that organizations with skills shortages in cybersecurity faced nearly double the possibility of sustaining a data breach emphasizing the sophisticated need for proficient solutions. Methods, such as voice recognition, fingerprint scanning, and other passwordless authentication are safe and do not take as much time as conventional methods. These solutions help fix the issues outlined by the growing incidence of phishing attacks and credential theft. Furthermore, this trend is only accelerated by industries such as finance, healthcare, and IT which are experiencing the shift towards digital transformation as companies demand the scalability of solutions to ensure that their operations remain secure.

• In 2023, the FBI alone received over 880,418 cybercrime complaints with losses of over USD 12.5 billion, underlining the serious risks of traditional password-based systems.

Restraint

Implementation due to high initial costs

High initial costs of implementing the passwordless authentication market solutions are expected to restrain market adoption, particularly for small and medium-sized enterprises (SMEs). The use of technologies, such as biometrics, multifactor authentication, and hardware security modules attract heavy infrastructure commitment and employee education. However, due to resource constraints, many organizations especially those relatively new in the field have not been able to finance the upgrade to these advanced authentication systems. This financial burden becomes challenging in areas with meager IT budgets or a developing IT environment since cost continues to be an issue. These constraints keep passwordless systems from being implemented more often despite the long-term advantage they provide to systems.

Opportunity

High investment in secure authentication solutions

High investment in the passwordless authentication market is projected to propel the development and implementation of next-generation access technologies. Worldwide corporations emphasize superior security systems to combat impending threats. Organizations stepped up for the technologies such as biometric and AI-based authentication solutions. Likewise, the World Economic Forum stated in 2023 that accurate AI-driven authentication technologies are necessary to push back against increasingly complex cyber threats and support governments and enterprises. These frameworks require stringent access control to protect such information, leading to a strong tendency to invest in high-cost solutions such as passwordless authentication. Furthermore, behavioral biometrics and continuous authentication keep drawing funding for the development of modern non-intrusive security solutions for enterprises.

• A report by Secureframe, a prominent provider in cybersecurity, reveals that the average cost of a data breach hit a record high in 2024, reaching USD 4.88 million. This marks a 10% increase compared to 2023.

Type Insights

The fingerprint or thumbprint authentication segment held a dominant presence in the passwordless authentication market in 2023, due to its spread across more industries such as consumer electronics, finance, and the health industry. Many enterprises were integrating biometrics identification in their security systems to make security more convenient and to reduce the shortcomings that come with use of passwords. Furthermore, fingerprint scans have been widely adopted by banking and healthcare sectors, thereby, where identity and privacy of such personal and financial information matter.

The authentication using face recognition segment is expected to grow at the fastest rate in the passwordless authentication market during the forecast period of 2024 to 2034, owing to its enhanced security performance and the need for contactless authentication caused by the pandemic. According to the Cybersecurity and Infrastructure Security Agency (CISA) in 2023, the use of facial recognition technology for secure access and identification becoming more widespread in the federal government space. Furthermore, the growing importance of hygiene, especially after the pandemic, and the ever-increasing novelty of touchless systems only add to the increased adoption of this technology in various industries.

Authentication Type Insights

The multi-factor segment accounted for a considerable share of the passwordless authentication market in 2023, due to their improved security functions. This likelihood of repeated cyber-attacks, phishing, and data breaches made organizations from all industries incorporate MFA as a key tool in their security measures. Moreover, the strong security model grew in demand every time companies operating across the globe started implementing enhanced data privacy regulations such as the GDPR of the European Union, and the CCPA of California.

The single factor segment is anticipated to grow with the highest CAGR in the passwordless authentication market during the studied years, owing to these applications where low-risk performances and breakpoint detection outweigh concerns of sophisticated security measures. Though SFA is not as secure as the MFA it is a better and faster approach for industries providing consumer-facing applications in a retail or entertainment landscape. Furthermore, the improvements in the use of mobile applications and cloud services, which use SFA for tasks such as account authentication or transaction confirmation further propel the segment.

Industry Vertical Insights

The BFSI segment led the global passwordless authentication market in 2023, due to the rise in regulatory rules and enforcement and the rising spate of cybercrimes aimed at the financial sector. Data protection, especially during transfer, became more of a concern to the sector with evolving regulatory requirements such as PSD2 in Europe, and CCPA in California among others this forced the adoption of passwordless authentication, especially multi-factor authentication (MFA). Phishing, account takeovers, and data breaches are all real threats to financial institutions since the cost of cybercrime in the financial sector is rising annually.

• According to Secureframe, the global cost of cybercrime is expected to reach USD 10.5 trillion by 2025, increasing at an annual rate of 15%.

The healthcare segment is projected to expand rapidly in the passwordless authentication market in the coming years, owing to the nature of hits surging, and healthcare organizations are shifting their focus to security to guard patient data. Laws such as the Health Insurance Portability and Accountability Act (HIPAA) in the United States are able to dictate strong measures for data protection. This is resulting in healthcare providers embracing innovative authentication methods in the protection of Electronic Health Records (EHR) and other important systems. Furthermore, the expansion of the digital healthcare industry involving telemedicine and wrist-worn health monitoring systems is likely to fuel the adoption of efficient and safe authentication methods.

• According to the 2024 report published by Cobalt, there has been a 239% increase in large breaches involving hacking over the last four years.

Passwordless Authentication Market Companies

• Cognitec Systems GmbH
• Fujitsu Limited
• Google LLC (Alphabet)
• HID Global Corporation
• IBM Corporation
• Microsoft Corporation
• NEC CORPORATION
• Okta
• Secret Double Octopus (SDO)
• Thales Group

Latest Announcements by Industry Leaders

• April 30, 2024 – Hawcx
• Co-founder & CTO - Selva Kumaraswamy
• Announcement- -Hawcx, a leader in intelligent passwordless authentication, has made a significant leap forward with the launch of its innovative platform. This platform aims to transform the authentication experience for enterprises and end-users alike, offering a seamless combination of security and convenience. Selva Kumaraswamy, Co-Founder and CTO of Hawcx expressed excitement about the platform's impact, stating, "Innovative key-based authentication secures sensitive user data, ensuring peace of mind for enterprises and end-users." He further emphasized that the platform is designed to be platform-agnostic, democratizing access for all internet users, thereby driving the adoption of secure authentication practices across diverse sectors. This milestone positions Hawcx as a key player in the passwordless authentication space, aiming to mitigate the security risks tied to traditional authentication methods.

Recent Developments

• In September 2024, Bitwarden, a trusted leader in password, secrets, and passkey management, announced key improvements to its inline autofill capabilities within the Bitwarden browser extension. Following the recent addition of autofill features for cards and identities, this update now supports passkey autofill, offering users a faster, more secure, and seamless login experience on websites and applications that support passkey authentication.
• In June 2024, REA launched a fully passwordless sign-in experience across its major brands, marking a significant step in improving user security and data protection. To celebrate, REA hosted a 10-day AI Art exhibition at its Cremorne headquarters in Melbourne.
• In March 2024, KSI Keyboards and AuthX partnered to enhance passwordless security in healthcare settings. Announced just ahead of the HIMSS24 conference in Orlando, this collaboration combines KSI's advanced keyboards featuring integrated RFID and fingerprint biometrics with AuthX’s single sign-on (SSO) platform.

Segments Covered in the Report

By Type

• Fingerprint or Thumbprint Authentication
• Authentication using Face Recognition
• Challenge-Response Authentication Mechanism
• Others

By Authentication Type

• Single Factor
• Multi-Factor

By Industry Vertical

• Aerospace and Defence
• BFSI
• Government and Law Enforcement
• IT and Telecom
• Healthcare
• Retail
• Transportation and Logistics
• Others

By Geography

• North America
• Asia Pacific
• Europe
• Latin America
• Middle East and Africa