Out-of-Band (OOB) Authentication Market

Market Overview:

The global out-of-band (OOB) authentication market size reached US$ 1.2 Billion in 2023. Looking forward, IMARC Group expects the market to reach US$ 6.6 Billion by 2032, exhibiting a growth rate (CAGR) of 19.69% during 2024-2032. The market is experiencing steady growth driven by the escalating threat of cyberattacks and data breaches, which necessitate robust security measures, the widespread adoption of smartphones and advances in mobile technology, and stringent regulatory compliance requirements across various industries.

Out-of-Band (OOB) Authentication Market Analysis:

• Market Growth and Size: The global market is experiencing significant growth, driven by the increasing need for enhanced security measures in various sectors. The rising prevalence of cyber threats and data breaches, along with stringent regulatory compliance requirements, are key factors contributing to this expansion. The market size is expected to continue growing as more organizations recognize the necessity of advanced authentication solutions.
• Technological Advancements: Advances in mobile technology and the widespread adoption of smartphones have been crucial in shaping the market. These technological improvements are facilitating the development of more sophisticated and user-friendly authentication methods, such as biometrics and push notifications. Continuous innovation in this space is introducing more advanced features, further bolstering market growth.
• Industry Applications: It has found substantial applications in industries handling sensitive data, including banking, healthcare, government, and IT. Its ability to provide secure transaction processing and data access control has made it a preferred choice in these sectors. As digital interactions increase across these industries, the reliance on OOB authentication solutions is poised to grow.
• Key Market Trends: A significant trend in the market is the shift towards multi-factor authentication (MFA), where OOB methods are combined with traditional authentication practices for enhanced security. Additionally, the integration of artificial intelligence and machine learning for real-time fraud detection in OOB authentication systems is gaining momentum.
• Geographical Trends: North America and Europe are leading in the adoption of these solutions, largely due to stringent regulatory requirements and high awareness about cybersecurity. However, Asia-Pacific is emerging as a rapidly growing market, driven by increasing smartphone penetration and growing digitalization in countries like China and India.
• Competitive Landscape: The market is characterized by the presence of both established players and emerging companies. Key players are focusing on innovation, strategic partnerships, and global expansion to strengthen their market position. The competitive landscape is dynamic, with continuous product development and collaboration shaping the market's trajectory.
• Challenges and Opportunities: One major challenge in the market is the potential vulnerability of OOB authentication methods to sophisticated cyber attacks. However, this also presents opportunities for innovation in developing more secure and resilient authentication solutions. Additionally, the expanding digital economy worldwide offers a vast opportunity for market growth, particularly in underpenetrated regions.
   

Out-of-Band (OOB) Authentication Market Trends:

Increasing incidence of data breaches and cybersecurity threats

The global market is significantly influenced by the rising incidence of data breaches and cybersecurity threats. As digital transactions and online activities continue to grow, businesses and individuals face heightened risks of cyberattacks. OOB authentication provides an additional layer of security beyond traditional methods, such as passwords and PINs, by utilizing a separate communication channel for verification. This method has become increasingly critical in preventing unauthorized access and data theft. Additionally, the growing awareness among organizations about the importance of safeguarding sensitive information and complying with regulatory standards is also propelling the demand. Moreover, the escalating frequency and sophistication of cyberattacks necessitate robust security measures, thereby driving the adoption of OOB authentication in various sectors, including banking, healthcare, and government.

Advancements in mobile technology and widespread smartphone usage

The proliferation of mobile technology and widespread smartphone usage are pivotal factors driving the global market. The ubiquity of smartphones is enabling the seamless integration of these methods, such as SMS-based verification or push notifications, into everyday activities. These methods leverage the mobile device as a secondary channel for authenticating transactions or logins, offering convenience and enhanced security to users. Along with this, the continuous advancements in mobile technology, including improved internet connectivity and the development of sophisticated mobile applications are facilitating the adoption. In addition, businesses are leveraging these technological advancements to provide secure and user-friendly authentication experiences. The global increase in smartphone penetration, particularly in emerging economies, is expanding the potential user base, thereby contributing significantly to market growth.

Stringent regulatory compliance requirements

The enforcement of stringent regulatory compliance requirements is another major factor influencing the growth of the global market. In confluence with this, regulations, and various other regional and sector-specific laws, mandate strict data protection and privacy measures. These regulations often require the implementation of robust authentication processes to ensure data security and prevent unauthorized access. OOB authentication, by providing a secure and verifiable method of confirming user identities, helps organizations comply with these regulatory standards. The need for compliance is particularly pronounced in industries handling sensitive information, such as finance, healthcare, and government services. As regulations become more rigorous and widespread, the demand for reliable and compliant authentication solutions further propelling market growth.

Out-of-Band (OOB) Authentication Industry Segmentation:

IMARC Group provides an analysis of the key trends in each segment of the market, along with forecasts at the global, regional, and country levels for 2024-2032. Our report has categorized the market based on component, authentication channel, deployment mode, enterprise size, and industry vertical.

Breakup by Component:

• Solution
  • Hardware
  • Software
• Services
   

Solution accounts for the majority of the market share

The report has provided a detailed breakup and analysis of the out-of-band (OOB) authentication market based on the component. This includes solution (hardware and software) and services. According to the report, solution (hardware and software) represented the largest segment.

The solution segment, encompassing both hardware and software, holds the largest share of the market. This dominance is attributed to the crucial role these solutions play in establishing a robust authentication framework. Hardware solutions, such as tokens and physical devices used for generating access codes, provide tangible security assets that are difficult to replicate or breach. Software solutions, on the other hand, are pivotal in managing authentication processes, generating one-time passwords (OTPs), and ensuring seamless integration with existing systems. Additionally, the demand for software solutions is particularly high due to their scalability, ease of update, and adaptability to various platforms. The advancements in technology and the increasing sophistication of cyber threats are leading to continuous innovation in this segment, making it an integral component of the market.

On the contrary, the services segment, while smaller compared to solutions, plays a vital role in the market. This segment includes professional services such as consultation, implementation, and maintenance, along with managed services. Along with this, the growing complexity of cybersecurity infrastructure and the need for effective implementation of OOB authentication solutions drive the demand for these services. Professional services are critical in ensuring that the OOB authentication solutions are aligned with the specific needs and security policies of an organization. They also provide essential support in the integration of these solutions into existing IT infrastructure. As organizations increasingly focus on core competencies, the reliance on external service providers for managing authentication solutions is rising, contributing to the growth of this segment.

Breakup by Authentication Channel:

• SMS
• Email
• Push Notification
• Voice
• Token-based
• Others
   

SMS holds the largest share in the industry

A detailed breakup and analysis of the market based on the authentication channel have also been provided in the report. This includes SMS, email, push notification, voice, token-based, and others. According to the report, SMS accounted for the largest market share.

The SMS segment commands the largest share in the market segmentation by authentication channel. This dominance is primarily due to the ubiquity and simplicity of SMS as a communication channel. SMS-based authentication works by sending a one-time password (OTP) to the user's mobile phone, which they then enter into the system to gain access. This method's widespread adoption is attributed to its ease of use and the fact that it does not require smartphones or internet connectivity, making it accessible to a broader user base.

On the other hand, the email-based OOB authentication segment involves sending OTPs or authentication links to users' email addresses. This method is particularly common in corporate settings where email is a standard communication tool. It is favored for its convenience and the ability to integrate with existing email infrastructure. It remains a significant part of the OOB authentication market, especially for applications where email is already a primary mode of communication.

In addition, push notification authentication is rapidly growing in popularity due to the widespread use of smartphones. This method involves sending a notification to a user's authenticated mobile app, asking them to approve or deny a transaction or login attempt. Its advantage lies in its speed, user-friendliness, and the added security layer since the notification is sent through an encrypted channel. Push notifications are increasingly preferred in environments where users have constant access to their smartphones and where quick, seamless authentication is required.

Apart from this, voice-based authentication involves using a voice call to deliver an OTP or a verbal authentication request. This method is particularly useful in scenarios where SMS or internet-based channels are not feasible or reliable. Voice authentication is valued for its high user accessibility, especially for users who are not comfortable with text-based methods or do not have smartphones.

Moreover, token-based authentication uses a physical device (token) that generates a unique code for user authentication. These tokens can be hardware devices such as key fobs or software-based tokens within a mobile app. This method is highly secure, as the token provides a physical barrier to unauthorized access. Token-based authentication is widely used in high-security environments like banking and corporate access control, where the added security of a physical device is necessary.

Breakup by Deployment Mode:

• On-premises
• Cloud-based
   

Cloud-based represents the leading market segment 

The report has provided a detailed breakup and analysis of the out-of-band (OOB) authentication market based on the deployment mode. This includes on-premises and cloud-based.  According to the report, cloud-based represented the largest segment.

The cloud-based segment holds the largest share in the market segmentation by deployment mode. This dominance is attributed to the numerous advantages that cloud-based solutions offer, including scalability, flexibility, and cost-effectiveness. Cloud-based OOB authentication allows organizations to implement robust security measures without the need for significant upfront investment in infrastructure. These solutions are maintained and updated by the service providers, ensuring that the latest security measures are in place. Additionally, the cloud model provides the convenience of remote accessibility, making it an ideal choice for businesses with a mobile workforce or those requiring authentication across multiple locations. Along with this, the growing inclination towards digital transformation and the increasing adoption of cloud services across various industries are key factors driving the popularity of these solutions.

On the other hand, the on-premises deployment mode, while smaller in market share compared to cloud-based solutions, remains a critical component of the market. This model is preferred by organizations that require complete control over their authentication systems and are concerned about data security in the cloud. On-premises solutions are typically chosen by entities with stringent regulatory compliance requirements or those handling highly sensitive data, such as government organizations and large financial institutions. In this model, the organization is responsible for the maintenance, management, and updating of the authentication system. While on-premises solutions offer high levels of security and control, they involve greater initial investment and ongoing operational costs compared to cloud-based solutions.

Breakup by Enterprise Size:

• Large Enterprises
• Small and Medium-sized Enterprises
   

Large Enterprises exhibits a clear dominance in the market 

A detailed breakup and analysis of the market based on the enterprise size have also been provided in the report. This includes large enterprises, small and medium-sized enterprises. According to the report, large enterprises accounted for the largest market share.

Large enterprises constitute the largest segment of the market. This predominance stems from their substantial resources and the complexity of their cybersecurity needs, which necessitate robust and comprehensive authentication solutions. Large organizations often have a vast array of sensitive data, multiple access points, and a global user base, making effective security measures like OOB authentication crucial. Additionally, these enterprises are usually more targeted by cybercriminals due to the wealth of data they possess, further underscoring the need for strong authentication practices. The scale of their operations justifies the investment in advanced OOB authentication methods, both in terms of technology and infrastructure. Furthermore, large enterprises often operate under strict regulatory environments, making compliance a key driver for adopting sophisticated solutions.

While the adoption of OOB authentication in small and medium-sized enterprises (SMEs) is growing, it remains less prevalent compared to large enterprises. SMEs often face budgetary constraints and limited IT resources, which can hinder the adoption of advanced authentication solutions. As these businesses grow increasingly aware of the risks associated with cyber threats and data breaches, the importance of robust security measures is becoming more evident. Furthermore, as SMEs increasingly participate in digital ecosystems and handle sensitive data, the need for secure authentication methods becomes critical. The market in SMEs is expanding as these businesses continue to realize the importance of cybersecurity in sustaining their operations and reputation.

Breakup by Industry Vertical:

• BFSI
• IT and Telecom
• Government and Defense
• Retail
• Healthcare
• Media and Entertainment
• Others
   

BFSI dominates the market

A detailed breakup and analysis of the market based on the industry vertical have also been provided in the report. This includes BFSI, IT and telecom, government and defense, retail, healthcare, media and entertainment, and others. According to the report, BFSI accounted for the largest market share.

The BFSI sector represents the largest segment in the market. This dominance is primarily due to the critical need for secure transactions and the protection of sensitive financial data. Financial institutions are frequent targets of cyberattacks and fraud, making robust authentication systems such as OOB essential. Additionally, regulatory requirements in the financial sector mandate stringent security measures, further driving the adoption. The sector's continuous innovation in digital banking services also necessitates advanced security solutions to protect online transactions and customer data, reinforcing the BFSI sector's leading position in the OOB authentication market.

On the contrary, in the IT and telecom sectors, the demand for OOB authentication is driven by the need to secure vast networks, protect proprietary information, and ensure customer data privacy. As these industries undergo digital transformation, the volume of sensitive data transmitted over networks increases, elevating the risk of cyber threats. OOB authentication offers a reliable solution to verify user identities and prevent unauthorized access, which is critical for maintaining the integrity of IT and telecom services.

Along with this, the government and defense sector require highly secure authentication methods due to the sensitive nature of their operations and the data they handle. OOB authentication is crucial for safeguarding classified information and ensuring secure communications. This sector often faces sophisticated cyber threats, making strong authentication systems a top priority. The adoption in this sector is also influenced by compliance with stringent security protocols and regulations.

In the retail sector, OOB authentication is increasingly important for protecting customer transactions and personal data. As e-commerce grows and retail businesses collect more customer information, the sector faces greater risks of data breaches and cyber fraud. Implementing OOB authentication helps retailers enhance security, build customer trust, and comply with data protection regulations.

Apart from this, the healthcare industry's adoption of OOB authentication is driven by the need to protect patient data and comply with health information privacy regulations. With the increasing digitization of health records and telemedicine services, secure authentication methods are essential to prevent unauthorized access and ensure patient confidentiality. OOB authentication plays a key role in safeguarding sensitive health information and maintaining trust in healthcare services.

For the media and entertainment industry, OOB authentication is vital in protecting intellectual property, subscriber accounts, and online streaming services. As this sector increasingly shifts to digital platforms, securing content and user data becomes crucial. OOB authentication methods help in preventing unauthorized access and piracy, ensuring the integrity and revenue streams of media and entertainment companies.

Breakup by Region:

• North America
  • United States
  • Canada
• Europe
  • Germany
  • France
  • United Kingdom
  • Italy
  • Spain
  • Russia
  • Others
• Asia Pacific
  • China
  • Japan
  • India
  • South Korea
  • Australia
  • Indonesia
  • Others
• Latin America
  • Brazil
  • Mexico
  • Others
• Middle East and Africa
   

North America leads the market, accounting for the largest out-of-band (OOB) authentication market share

The market research report has also provided a comprehensive analysis of all the major regional markets, which include North America (the United States and Canada); Asia Pacific (China, Japan, India, South Korea, Australia, Indonesia, and others); Europe (Germany, France, the United Kingdom, Italy, Spain, Russia and others); Latin America (Brazil, Mexico, and others); and the Middle East and Africa. According to the report, North America accounted for the largest market share.

North America leads the global market, primarily driven by the United States. This dominance can be attributed to several factors, including the presence of a large number of major market players, high adoption of advanced cybersecurity solutions, and stringent regulatory standards that mandate strong authentication practices. Additionally, the region's well-established financial, healthcare, and IT sectors, which are frequent targets of cyberattacks, contribute significantly to the demand for robust OOB authentication solutions. The high awareness of cybersecurity threats and the substantial investment in IT infrastructure further reinforce North America's leading position in the market.

In addition, Europe holds a significant share of the market, with its growth propelled by stringent data protection regulations. These regulations necessitate robust authentication methods for data security, thereby driving the demand for OOB authentication solutions. In addition, the presence of a mature banking sector and growing focus on securing online transactions and protecting consumer data further enhance the market in this region.

Along with this, the Asia Pacific region is experiencing rapid growth in the market. Factors fueling this growth include increasing smartphone penetration, expanding digital banking services, and rising awareness of cybersecurity threats. Countries such as China, India, and Japan are leading this growth, driven by their large population base, growing IT and telecom sectors, and emerging financial services industries. Along with this, government initiatives towards digitalization and improving cybersecurity infrastructure are contributing to the market's expansion in this region.

In Latin America, the market is gradually growing, influenced by increasing internet penetration and digitalization of businesses. Countries such as Brazil, Mexico, and Argentina are leading this growth, where there is a growing emphasis on enhancing cybersecurity measures in response to the rising incidence of cybercrimes. The financial and government sectors are particularly contributing to the demand for OOB authentication solutions in the region.

Furthermore, the market in the Middle East and Africa is evolving, with a growing focus on cybersecurity in response to an increase in cyber threats and government initiatives towards digital transformation. The banking sector, along with the oil and gas industries, are significant contributors to the demand for OOB authentication solutions in this region. The increasing adoption of digital banking and e-government services in countries including the UAE, Saudi Arabia, and South Africa is also fueling the market growth in the Middle East and Africa.

Leading Key Players in the Out-of-Band (OOB) Authentication Industry:

Key players in the market are actively engaged in various strategic initiatives to strengthen their market position and respond to the evolving cybersecurity landscape. These companies are investing heavily in research and development to innovate and enhance their authentication solutions, focusing on integrating advanced technologies such as biometrics and artificial intelligence for improved security and user experience. Additionally, strategic partnerships, mergers, and acquisitions are common as companies seek to expand their global reach and capabilities. They are also concentrating on forging alliances with telecommunication companies and financial institutions to widen their customer base. Furthermore, these players are often involved in efforts to comply with regional and global regulatory standards, ensuring their solutions meet the stringent requirements of different industries and markets.

The market research report has provided a comprehensive analysis of the competitive landscape. Detailed profiles of all major companies have also been provided. Some of the key players in the market include:

• Deepnet Security
• Early Warning Services LLC
• i-Sprint Innovations Pte Ltd
• OneSpan
• Ping Identity Corporation
• RSA Security LLC
• SAASPASS
• SecurEnvoy (Shearwater Group plc)
• SolidPass
• StrikeForce Technologies Inc.
• Thales Group
   

(Please note that this is only a partial list of the key players, and the complete list is provided in the report.)

Latest News: 

• November 14, 2023: Ping Identity Corporation partnered with ConnectID to facilitate new client acceptance and easier integration into current systems.
• November 02, 2023: OneSpan announced a special new feature for its industry-leading e-signature system, OneSpan Sign, to provide businesses with a more effective means of protecting a document's provenance from new security risks.
• July 14, 2023: RSA Security LLC struck a deal (the "Amendment") on the use of the net proceeds from the sale of Archer Technologies ("Archer") with a sizable majority of its first-lien lenders.

Out-of-Band (OOB) Authentication Market Report Scope:

Key Benefits for Stakeholders:

• IMARC’s report offers a comprehensive quantitative analysis of various market segments, historical and current market trends, market forecasts, and dynamics of the out-of-band (OOB) authentication market from 2018-2032.
• The research study provides the latest information on the market drivers, challenges, and opportunities in the global out-of-band (OOB) authentication market.
• The study maps the leading as well as the fastest growing regional markets. It further enables stakeholders to identify the key country-level markets within each region.
• Porter's five forces analysis assist stakeholders in assessing the impact of new entrants, competitive rivalry, supplier power, buyer power, and the threat of substitution. It helps stakeholders to analyze the level of competition within the out-of-band (OOB) authentication industry and its attractiveness.
• Competitive landscape allows stakeholders to understand their competitive environment and provides an insight into the current positions of key players in the market.