Authentication Services Market - Growth, Trends, Covid-19 Impact, And Forecasts (2021 - 2026)

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The Authentication Services Market was valued at USD 731.34 million in 2020 and is expected to reach USD 2411.45 million by 2026, at a CAGR of 22% over the forecast period 2021 - 2026. Digital channels are becoming significant as consumers interact with businesses and each other. In this digital world, companies are becoming increasingly dependent on a web of systems, both on and off their networks, to manage, store, and transmit various information, such as the financial accounts, personally identifiable information, intellectual property, and transaction records. In support of this, organizations are increasingly adopting automation solutions to enable swift workflow and analyze the work processes so that they can improvise the areas that challenge the company's progress.

- Moreover, a steep increase in the number of security and data breaches have made it imperative for organizations to adopt robust authentication tools. According to a survey by IdentityForce, there were approximately 2,013 confirmed data breaches in 2019. Microsoft reported a data breach of its non-corporate email services from January to March 2019. ...
... It allowed hackers to access email accounts by manipulating Microsoft's customer support portal.
- Further, an immense amount of data is being deployed over the cloud, increasing the vulnerability of data breaches. In October 2019, Adobe reported the unauthorized exposure of account information of 7.5 million users on Adobe Creative Cloud, due to an unprotected online database.
- Growing data breach incidents are driving the adoption of authentication services across the world. According to the 2020 Trustwave Global Security Report, it was found that 33% of cyberattack incidents occurred in North America. Small and medium enterprises (SMEs) are considered the most-affected end users when it comes to cyberattacks. They suffer more malware attacks, but the frequency of attacks against SMEs appears to be on the rise.
- During the current situation of a global pandemic, the demand for remote work solutions has been witnessing a surge, owing to multiple enterprises transitioning from their conventional workplace setup to work from home scenarios. These impacts have to be carefully taken care of in the context of the organization's cybersecurity, as more personal unsecured devices started accessing the organization network, increasing the risk of compromising network security.
- Additionally, since the start of the COVID-19 outbreak, the number of cyberattacks has been drastically increasing, adversely affecting individuals, businesses, and organizations. According to the Check Point Software Technologies survey, the number of cyberattacks during the Q1 of 2020 increased by more than 70%. Such a large number of cybercrimes in the context of COVID-19 made the public question the reliability of the existing sensitive data management practices. These instances are further fueling market growth.

Key Market Trends

Multi Factor Authentication is Expected to Drive the Market Growth

- Passwords have been a traditional source of authentication for the past couple of years. However, hackers exploit this single gateway to access the records of the users and companies and cause losses worth billions to these entities. A recent study by Verizon suggests that compromised identities represent the top reason for security breaches. In the previous year (2019), the number of data breaches in the United States alone aggregated to 1,473, with more than 164.68 million records exposed, according to the survey data published by the Identity Theft Resource Center.
- Multifactor authentication has been promoted as a countermeasure to reduce the incidences of data breaches. Further, according to Verizon, insecure password practices exploited in 81% of these spurring cyberattacks worldwide in 2017. While employee education and training can help, the demand for multifactor authentication to require additional proof of identity beyond simple username and password is gaining widespread acceptance in the United States.​
- The concept of multifactor authentication was first conceptualized in 1984, and since 2010, multifactor authentication was widely used. This earlier application required complex infrastructure and additional devices. But with the increase in cloud services, the authentication methods have increased vastly. Now forms of MFA include a password combined with authentication apps, facial recognition, or fingerprint readers. ​
- Owing to this, governments across the world are promoting the use of multifactor authentication. For instance, in the United States, the Defense Federal Acquisition Regulation Supplement (DFARS), in its directive, has outlined the mandatory use of multifactor authentication for all local and remote accounts associated with users who access controlled and unclassified information. 

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North America is Expected to Hold the Largest Share

- North America is anticipated to lead the market studied, with the United States being the most prominent contributor. Businesses in the region are increasingly getting dependent on computer networks and electronic data to conduct their regular operations. Increasing pools of personal and financial information are also transferred and stored online.
- According to IBM, the country with the highest average total cost of a data breach amounted to USD 8.19 million in 2019 was the United States. As per the Identity Theft Resource Center, in 2018, the number of data breaches and exposed records in the United States was 1,257 and 471.23 million, respectively.
- Furthermore, the BYOD trend favors the conditions for advanced authentication methods, such as smart cards, physical tokens, and KPIs, to access sensitive information or to login to the client servers.
- Moreover, with the regulatory bodies in the region warning financial institutions against cyber threats, the demand for market studied is anticipated to increase. For instance, the Fed and the OCC are urging financial institutions under their supervision of the importance of high cybersecurity risk management policies during periods of heightened global stresses.
- The joint statement from the two agencies, issued in January 2020, stresses the importance of high-risk management measures, including reviewing, updating, and testing incident acknowledgment and business continuity plans, guarding against unauthorized access with decent authentication and securely configuring systems and services.

Competitive Landscape

The competitive rivalry in the authentication services market is high. The ability of these competitors to continually innovate their products and services has enabled them to achieve a competitive advantage over other players in the market. Through research and development activities, mergers and acquisitions, and strategic partnerships, these players can gain a larger footprint in the market. Some of the recent developments in the market are:

- January 2020 - IBM filed a patent for developing a self-aware token primarily designed to record events of an offline transaction, with the United States Patent and Trademark Office. The patent filed relates to financial data processing in an electronic currency platform and processing e-commerce tokens, which involve offline transactions.
- March 2019 - FSS (Financial Software and Systems), a global payments technology company, launched the FSS Secure3D, the company's new-generation adaptive authentication solution based on the EMVCo 3DS 2.0 protocol. Globally, across various regions, banks are needed to implement the 3DS2.0 between 2019 and 2020.

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