Global Out of Band Authentication Market to Reach US$3.7 Billion by 2030

The global market for Out of Band Authentication estimated at US$1.6 Billion in the year 2024, is expected to reach US$3.7 Billion by 2030, growing at a CAGR of 15.4% over the analysis period 2024-2030. Solutions, one of the segments analyzed in the report, is expected to record a 13.8% CAGR and reach US$2.3 Billion by the end of the analysis period. Growth in the Services segment is estimated at 18.5% CAGR over the analysis period.

The U.S. Market is Estimated at US$402.2 Million While China is Forecast to Grow at 20.2% CAGR

The Out of Band Authentication market in the U.S. is estimated at US$402.2 Million in the year 2024. China, the world`s second largest economy, is forecast to reach a projected market size of US$915.0 Million by the year 2030 trailing a CAGR of 20.2% over the analysis period 2024-2030. Among the other noteworthy geographic markets are Japan and Canada, each forecast to grow at a CAGR of 11.3% and 13.2% respectively over the analysis period. Within Europe, Germany is forecast to grow at approximately 12.3% CAGR.

Global Out-of-Band Authentication Market - Key Trends & Drivers Summarized

Why Is Out-of-Band Authentication Essential for Modern Security?

Out-of-band (OOB) authentication has become a critical component in modern security frameworks, offering an additional layer of protection that mitigates the risks associated with traditional single-channel authentication methods. OOB authentication uses two separate channels to verify user identity during a transaction, ensuring that even if one channel is compromised, unauthorized access remains unlikely. This approach is particularly effective in combating phishing attacks, man-in-the-middle attacks, and account takeovers, which are increasingly common as cyber threats grow in sophistication. By verifying identity through an independent channel—such as a phone call, text message, or email—OOB authentication provides enhanced security by isolating the authentication process from potentially compromised systems.

The rise in online transactions, mobile banking, and cloud applications has heightened the demand for secure authentication methods that protect sensitive data and financial transactions. For financial institutions, OOB authentication is especially valuable as it adds a robust layer of defense that meets regulatory requirements, such as those from the Payment Card Industry Data Security Standard (PCI DSS) and the General Data Protection Regulation (GDPR). By leveraging OOB methods, banks and financial service providers can offer customers peace of mind by ensuring that their accounts and transactions are protected against unauthorized access. With cyberattacks targeting both individuals and organizations at unprecedented levels, OOB authentication has emerged as an essential solution in securing digital transactions and protecting user identities across multiple sectors, from finance to healthcare.

Furthermore, OOB authentication is highly adaptable, allowing organizations to implement flexible, multi-factor authentication (MFA) options that cater to user preferences and security needs. For example, some OOB systems use mobile push notifications or biometric verification, which add convenience without sacrificing security. This adaptability has made OOB authentication attractive to enterprises seeking to balance security with user experience, particularly as remote work becomes the norm and users demand easy, secure access to systems from multiple devices. As companies face increasing pressure to protect sensitive data and ensure user trust, OOB authentication provides a scalable, effective solution that addresses modern security threats while maintaining a user-friendly experience.

How Are Emerging Technologies Enhancing Out-of-Band Authentication?

The out-of-band authentication market has benefited significantly from technological advancements, particularly in areas like biometric verification, artificial intelligence (AI), and encryption, which have enhanced the reliability and user-friendliness of OOB systems. Biometric verification, such as facial recognition, fingerprint scanning, and voice authentication, has become an increasingly popular component in OOB authentication, offering a high level of security with minimal inconvenience to users. By incorporating biometrics, OOB systems ensure that authentication requests are verified through unique physical traits, making it difficult for attackers to bypass security. Biometric-enabled OOB solutions are particularly effective in mobile banking and secure access applications, as they can leverage the biometric capabilities of modern smartphones and other devices to authenticate users seamlessly.

AI and machine learning have further strengthened OOB authentication by enabling systems to detect anomalies and suspicious patterns in real time. These technologies analyze user behavior, such as login location and time, and can trigger OOB verification if any deviations from typical patterns are detected. By applying machine learning algorithms, OOB authentication systems can dynamically adjust security requirements based on user behavior, ensuring that authentication is required only when necessary. This approach reduces friction for legitimate users while increasing security for potentially high-risk actions. In addition, AI-driven risk assessment allows organizations to streamline the OOB process, making it faster and more accurate. For example, if a user typically logs in from the same IP address, the system may not prompt for OOB verification, but if an unusual location or device is detected, additional OOB steps are triggered. This capability helps organizations maintain a balance between security and user convenience, making OOB authentication systems smarter and more responsive to real-world risks.

Encryption and secure communication protocols have also advanced, enhancing the reliability of OOB channels by protecting authentication data from interception and tampering. OOB methods such as SMS, phone calls, and email now use end-to-end encryption to ensure the integrity of transmitted data. For example, some OOB systems generate one-time passcodes (OTPs) that are encrypted and delivered securely to users. Additionally, secure push notifications have emerged as a secure, real-time OOB authentication method, offering users encrypted messages that they can approve or deny within a dedicated app. This method provides increased security compared to SMS and email, which are more vulnerable to interception. As encryption technology continues to evolve, it strengthens the channels used for OOB authentication, allowing organizations to secure transactions and account access with confidence.

What Are the Benefits of Out-of-Band Authentication for Organizations and Users?

Out-of-band authentication provides significant security and usability benefits for organizations and users alike, making it a preferred choice in multi-factor authentication (MFA) implementations. For organizations, the primary advantage of OOB authentication is the added security it provides, as it isolates the verification process from the primary login channel. This isolation reduces the likelihood of account compromise, even if the user’s credentials are stolen or phished. By employing two separate channels, OOB authentication limits exposure to cyber threats, making it more resilient against common attacks like credential stuffing, man-in-the-middle attacks, and session hijacking. This security advantage is particularly important for industries that handle sensitive information, such as banking, healthcare, and e-commerce, where data breaches can result in significant financial and reputational damage.

Another benefit of OOB authentication is its ability to meet regulatory compliance requirements in industries where data protection is essential. Many regulations, such as the PCI DSS and GDPR, mandate strong authentication protocols to safeguard user information. OOB authentication not only satisfies these requirements but also demonstrates a proactive approach to data security, which is increasingly valued by regulators and customers alike. By implementing OOB authentication, organizations signal a commitment to secure data handling, which enhances trust with customers and reduces the risk of penalties associated with non-compliance. For companies in highly regulated sectors, OOB authentication offers a reliable way to fulfill security requirements while providing clients with assurance that their data is being protected to the highest standards.

For users, OOB authentication provides a convenient yet robust security layer that enhances their experience without causing significant disruption. Many OOB systems are designed to integrate seamlessly with everyday devices like smartphones, making it easy for users to authenticate with a quick phone call, SMS, or app-based approval. OOB methods that incorporate biometrics add further convenience, allowing users to verify their identity without having to remember additional passwords or PINs. Additionally, OOB authentication enhances user confidence by providing a transparent and secure process, alerting them to potential fraudulent access attempts. For example, if an unauthorized login attempt occurs, users are immediately notified and can deny the request, effectively stopping the intrusion in real time. This proactive approach to security empowers users, giving them control over their account access and reinforcing trust in the organization’s commitment to safeguarding their information.

What Is Fueling the Growth in the Out-of-Band Authentication Market?

The growth in the out-of-band authentication market is driven by the increasing prevalence of cyber threats, regulatory pressures for stronger authentication, the rise of remote work, and growing awareness of data privacy among consumers. As cyberattacks become more sophisticated, organizations across industries are recognizing the need for multi-factor authentication methods that provide stronger protection against credential-based attacks. OOB authentication is uniquely positioned to meet these needs, as it leverages separate channels to verify user identity, making it more resilient to phishing and man-in-the-middle attacks. The demand for secure authentication is particularly high in the financial services and healthcare sectors, where the risk of data breaches and the value of stolen information are substantial. As companies seek to protect themselves and their clients from the financial and reputational damage associated with data breaches, OOB authentication is increasingly being adopted as a robust and reliable security measure.

Regulatory requirements for stronger authentication protocols are another significant driver in the OOB authentication market. Regulations such as GDPR, PSD2, and HIPAA mandate strong authentication measures to protect user data and ensure secure access to sensitive information. OOB authentication not only complies with these requirements but also provides organizations with an effective way to safeguard against unauthorized access. In financial services, for instance, the Payment Services Directive 2 (PSD2) requires multi-factor authentication for online payments within the European Union. OOB authentication meets this mandate, making it a preferred choice for banks and payment providers that need to secure transactions and protect customer data. As regulatory frameworks continue to evolve, organizations are increasingly turning to OOB authentication as a means to achieve compliance while reinforcing their security posture.

The rise of remote work has further accelerated the adoption of OOB authentication, as organizations seek secure ways to enable remote access to corporate networks and applications. With more employees accessing sensitive data and systems from home, ensuring secure and reliable authentication has become essential. OOB authentication offers a practical solution by enabling secure verification from personal devices, supporting remote work without compromising security. Remote workers can authenticate via mobile apps, SMS, or email, allowing them to access systems securely without relying on traditional office-based security infrastructure. As remote work becomes a permanent fixture in many organizations, the demand for OOB authentication is expected to continue to grow, driven by the need to protect sensitive information in a distributed workforce.

Increased consumer awareness of data privacy and security is also driving market growth, as users demand more secure and transparent methods of protecting their accounts. High-profile data breaches and cyber incidents have heightened public awareness of the risks associated with inadequate authentication. In response, organizations are investing in OOB authentication as a way to reassure customers of their commitment to data protection. By implementing OOB methods, companies not only enhance their security capabilities but also build trust with consumers who value secure access to their personal data. Together, these factors—the growing threat landscape, regulatory compliance demands, the rise of remote work, and consumer demand for data privacy—are fueling the expansion of the out-of-band authentication market, positioning it as a cornerstone of modern cybersecurity practices.