Security risks are increasing day by day as banks are being plagued by loan frauds, primarily due to authentication breach. BFSI sector is taking every measure to take their internal authentication up a notch. Apart from their data, protecting customer’s money is also a major concern for banks and other financial institutions such as investment funds and credit card companies. Also, various IT firms and government organization are concerned due to data breaches and records exposed. According to Gemalto's Breach Level Index (BLI), the number of data records impaired in data violation in 2017 exceeded 2.50 billion and is 88% higher than in 2016.  To overcome these issues organizations and government are opting for the multi-factor authentication system.

Multifactor authentication helps to reduce the incidences of online identity theft and online fraud, as now, the victim's password is not the only authentication factor that can prevent fraudulent activities. Hence, various institutes are implementing multifactor-factor authentication systems.

FinTech companies offer digital payment platforms that have been growing steadily over the past decade as they provide a convenient solution to end users. As of February 2015, bank spending on new technologies in North America was USD 17.00 billion and it has increased to USD 19.90 billion in 2017. The ease of transactions is boosting numbers of end users, which may create few problems such as theft of password and security to its users.

Breaching of financial data is a potential threat to FinTech companies, owing to which FinTech companies are integrating two-factor and multi-factor authentication in the process of digital payment driving the growth of the market during the forecast period.

Few OTP systems are susceptible to real-time replay and social engineering attacks, the real-time attack is caused by a man-in-the-middle (MITM) attack.  In these types of attacks, malware on the browser captures user credentials and forwards these details to the attackers, simultaneously blocking the user request. The user receives an error message which reports a failure, meanwhile, the attacker performs an immediate replay with the same credentials.

Hardware token, as well as software token, are vulnerable to real-time and social engineering attack. Two-factor authentication is not prone to malware and phishing. For instance, as per Kaspersky Lab statistics in 2016, the share of financial phishing increased from 13.1% to 47.4%. Thus, these factors can be the major restraint for the growth of multi-factor authentication market.

Two-factor authentication is a double-stage process, providing a new security layer, because two authentication dynamics, such as ID and password, are asked to the user. Two-factor authentication makes access to online accounts, connected applications and other similar devices difficult for attackers.

Two-factor authentication protects attackers from accessing the account even when they get the username and password. Due to two-factor authentication, online identity theft and other online fraud are drastically reduced, as the victims ' password is no longer enough to permanently allow thieves access to their information. However, authentication with two factors can be ineffective against modern threats such as phishing ATM skimming, and malware. For example, cybercriminals had logged onto the online bank accounts of victims in Telefónica in May 2017 and asked for cash to be withdrawn into the accounts owned by criminals. Passcodes for SMS had been routed into the attackers ' controlled phone numbers and the money was transferred by the criminals.

In recent years, there have been new advancements in two-factor authentication models and at present, this model is majorly used by banking and financial system, government and another application sector. Two-factor authentication market is expected to dominate the market throughout the forecasted period though the growth rate is comparatively low than other authentication models. In 2018 the two-factor authentication market was valued USD 3.17 billion and by 2025 it is expected to grow with the highest CAGR of about 23.0% during the forecast period.

Governments across the world are implementing policies focusing on higher adoption of multi-factor authentication (MFA) solutions that can prevent & protect password-based attacks, critical data, and systems. In February 2016, President of the U.S, Barak Obama highlighted the need for multi-layered security in his Cybersecurity National Action Plan. The plan laid out a multi-layered approach to boost the security of federal systems.

Multi-factor authentication is one of the most effective controls been implemented by the governments for preventing the devices from unauthorized access, networks, and sensitive information. Multi-factor authentication makes it significantly difficult for an adversary to steal credentials and perform malicious activities on a network.

Also, a few examples illustrate that acceptance of multi-layered authentication in the government sector is now growing. For instance, the UK Government uses a centralized registration and authentication system called “The Government Gateway” to support secure authenticated e-government transactions over the Internet. Authentication of customers is based on either a password or digital signatures depending upon the type of transaction. Similarly, Austrian Government has implemented multi-factor authentication, where they use a “Citizen Card”, which is either a smartcard, a mobile phone or a USB token that is capable of creating secure digital signatures to provide secure storage of personal data.

With the rising frequency of authentication-based cyber-attacks, several governments across the world have started implementing policies mainly focusing to drive the adoption of multi-factor authentication (MFA).  Multi-factor authentication applied by governments was valued at USD 1.05 billion in 2018 and is anticipated to grow at a CAGR of almost 23.0% over the forecast period.

North America is leading the global multi-factor authentication market, accounted for USD 1.84 billion in 2018 and is projected to reach USD 8.55 billion by 2025. This is one of the most technologically advanced regions, also witnessing a continuous rise in adoption of the identity access management, fingerprint, and biometric technology by the defense, government, law enforcement, banking, consumer electronics, and healthcare sectors. Moreover, the United States offers significant potential for the growth of the multi-factor authentication market. The presence of a large number of IT organizations, financial institutes and government has bolstered the demand for strong and secure multi-factor authentication.

Moreover, major players from this region are upgrading their products plus launching new ways to secure the customer's data due to which this region has gained popularity. Additionally, the presence of a strong regulatory framework and sustainable development policies towards a reduction in cybercrimes and data procurement is also driving the adoption of this technology in the region.

United States is being the leader of the North America MFA market, has generated USD 1.57 billion in 2018, due to strict legislative compliance in healthcare, and banking, moreover finance-related applications are witnessing a noteworthy growth in this region. Because of the presence of developed IT infrastructure, financial institutions, and growing demand for reliable authentication models in those institutes, the US has won the majority share in the multi-factor authentication market.   Also, several banks along with many FinTech institutes from the U.S. such as JPMorgan Chase & Co., Wells Fargo, and others have prompted the adoption for multi-factor authentication models. In the US by application, healthcare is expected to grow at the highest CAGR of 27.6% due to the rising concern of securing patient’s data.

APAC is the fastest growing region in multi-factor authentication market, it will grow at CAGR 24.8% by 2025. A major factor for the higher growth rate is rising consumer base for multi-factor authentication technology. India, China, Japan, and Australia are the major countries in APAC region operating MFA technology. Moreover, India and China are the biggest contributors to the market. Japan, being a mature market for biometric technology, also generates good revenue for multi-factor authentication industry.