By David Tran on December 11th, 2012

According to a recent multi-factor authentication market research study published by MarketsandMarkets.com, the multi-factor authentication market is expected to reach $5.45 billion by 2017.  It is estimated that between 2012 and 2017, the year over year growth rate of the multi-factor authentication market will be 17.3%.  A key factor contributing to the fast growth of the multi-factor authentication market is the rising number of regulatory compliance requirements.  The global multi-factor authentication market has also seen significant growth in the popularity of phone based authentication solutions.

Phone based authentication solutions such as DynaPass’ two factor authentication solution are growing in popularity because it’s easy to implement, cost efficient, reliable, and most of all secure.  Since mobile phones are owned by over 85% of the U.S. population, users implementing phone based two factor authentications do not need additional hardware besides a mobile phone and there is no need to install software on their computer or phone.  Two-factor authentication, also called strong authentication, is a federally mandated method for user authentication when protecting sensitive information in industries such as finance, education, and healthcare.

For example, last year the FFIEC supplemental guidance outlined the blueprint for the security levels that financial institutions need to combat fraud and succeed in the competitive banking environment.  At the core of those requirements is customer authentication.  The guidance doesn’t outline a single type of authentication solution across all channels, but multiple security tools that give all channels true multiple layers of authentication, whether customers pay online or request bank transactions over the telephone.  DynaPass’ phone based two factor authentication allows users to receive a one-time password via SMS text message to their mobile phone to authenticate them.  This satisfies the “sometime you have” category, an essential component of the FFIEC’s multi-factor authentication paradigm that requires banks to have at least two of the categories for customer authentication, including: “something you know” (password, pin number), “something you are” (fingerprint, DNA, retinal pattern), and “something you have” (ID, ATM card, security token, mobile phone).

According to research firm Frost & Sullivan, people using mobile banking services will increase from 12 million in 2009 to 45 million by 2014.  This means that financial institutions operating without a secured environment will not be able to keep their customers who will move over to their competitors that have security features such as DynaPass’ phone based two-factor authentication.

The two-factor authentication model covers almost 90% of the market for multi-factor authentication and three, four-, and five-factor authentication models are less used when compared to two-factor authentication.  The multi-factor authentication market is spreading across all industries where security is a concern.  Currently, America is the biggest multi-factor authentication market with Europe and APAC following behind.  Phone based two-factor authentication is the security method of choice by many users and will continue to be since it is easily deployable, cost efficient, and effective.