Is Passwordless Authentication Ready for Regulatory Compliance?

How organizations protected their applications ten years ago looks drastically different from how they do so today. Evolving authentication methods constantly improve on previous ones to provide a better user experience and safer protection from cybersecurity attacks.

In keeping with these changes, the regulatory landscape has also updated standards to match current authentication trends. With data breaches becoming more sophisticated, compliance standards have evolved to address the growing complexities of safeguarding sensitive information.

For organizations, complying with these standards is crucial. Yvonne Wilson and Abhishek Hingnikar, for example, argue in Solving Identity Management in Modern Applications that compliance ensures your users that you’re committed to protecting their data efficiently, thus giving you a competitive advantage while avoiding possible penalties and repercussions. Organizations striving to adhere to these standards must ensure their authentication methods are safe and easy to use for their customers.

This article delves into the intersection of compliance demands and the rising trend of passwordless authentication. Specifically, it examines whether passwordless authentication is ready to meet the challenges posed by compliance requirements.

What Is Passwordless Authentication?

Unlike traditional authentication methods that rely heavily on passwords, passwordless authentication uses methods such as biometrics, hardware tokens, or one-time codes sent to registered devices.

At its core, passwordless authentication is redefining how users access their data. Password-based authentication requires users to create and remember passwords. This often leads to users having difficulties remembering their passwords or creating unsafe and obvious ones, putting their data at risk. Additionally, users who use the same password on multiple platforms risk having all their credentials stolen when a data breach occurs on just a single platform.

Passwordless authentication, however, introduces alternative mechanisms that rely on factors other than passwords for user verification. For example, users can log in with a fingerprint scan for multiple applications without having to worry about switching passwords. In this scenario, their fingerprint is their unique identifier, something that verifies their identity without a password.

Due to this promise of both enhanced security and user convenience, passwordless authentication is increasingly being widely adopted.

How Do Regulations Shape Authentication Methods?

The regulatory landscape, which is governed by standards such as SOC2, shapes how organizations approach cybersecurity.

SOC 2, which stands for Systems and Organization Controls 2, was developed by the American Institute of CPAs and is a widely recognized framework for managing and securing sensitive information. Compliance with SOC2 involves meeting stringent criteria for security, availability, processing integrity, confidentiality, and privacy via an independent auditor.

Meeting such criteria is important for businesses to gain the trust of their customers. Furthermore, following these external standards and verifying them through a third-party auditor means businesses can rest assured that their security systems are working as intended.

Though compliance with cybersecurity standards is important for ensuring data safety and privacy, standards can decelerate (or even prevent) the evolution of authentication methods. Adhering to standards means engineers and architects alike must prioritize that their authentication methods meet these standards rather than devising new solutions that risk non-compliance---even if these new solutions are much better.

For instance, passwordless authentication methods are considered non-compliant with certain cybersecurity standards, such as PCI DSS 3.2.1. This is preventing passwordless from gaining even wider adoption, even if it is the superior authentication method.

Is Passwordless Ready for Compliance?

So should passwordless authentication be accepted in more regulatory standards?

Is Passwordless a Better Alternative?

Let’s first examine whether passwordless can indeed provide a safer and more streamlined alternative to password-based authentication.

Phishing and Compliance

Phishing attacks remain a significant concern for regulatory bodies.

Since password-based authentication methods do not protect people from revealing sensitive data to those who trick them, these methods are more susceptible to phishing attacks that put sensitive data at risk. They, in turn, make organizations susceptible to hackers gaining unauthorized access to their data and breaking their compliance with security standards.

Many organizations have therefore had to create additional measures to prevent these attacks from happening.

Passwordless measures, on the other hand, prevent phishing attacks from occurring by connecting authentication methods closer to the person or their device. In particular, biometrics, such as fingerprint or facial recognition, poses greater challenges for hackers to reproduce than password strings, making it an overall safer and more efficient authentication method that prevents security breaches.

The User and Customer Experience

Regulatory demands can create friction in the user experience.

For example, password-complexity requirements that demand users include special characters, numbers, and capitalization can frustrate users who have difficulty memorizing their passwords or even those who prefer not to have their passwords dictated. Secondary authentication methods for those who forget their passwords can pose additional risks and frustrations for users, further diminishing their view of your application and business.

Passwordless solutions, with their emphasis on seamless authentication, are much better aligned with user needs. Facial recognition and fingerprint scans do not require users to repeatedly enter long and complex passwords for access. Users simply scan their fingerprints or look at their cameras. One-time passwords sent to the user’s device or email prevent additional cognitive load for remembering multiple passwords.

Eliminating the need to remember complex passwords also lets organizations skip alternative pathways of authentication that may put user data and satisfaction at risk.

Multi-factor Authentication

While complex passwords can enhance security, passwords provide only one layer of protection. Even those complex passwords can be leaked or stolen, putting organizations one step away from a data breach.

Multi-factor authentication (MFA) steps in to provide an extra layer of security.

MFA requires users to provide multiple forms of identification, which significantly enhances security. In addition to their password, users log in using biometrics, device authentication, or one-time passwords sent to their email. Because MFA includes a passwordless authentication method alongside a password-based one, it is technically not passwordless. However, this layered approach ensures a higher level of security, meeting the criteria set forth by regulatory standards because it includes passwords.

How Widespread Is Passwordless Adoption and Recognition?

Second, let’s consider how widely passwordless is adopted and recognized.

Mobile Authentication and Regulatory Concerns

Since smart mobile devices have gained popularity, mobile-based authentication methods that are passwordless have likewise gained prominence. This increase in popularity is gradually allowing regulators to recognize passwordless authentication as a legitimate alternative.

Biometric authentication, for example, has exploded in popularity since mobile devices developed the capacity to scan fingerprints and detect faces. The widespread availability of these devices has suddenly made passwordless a more streamlined authentication process compared to requiring the user to clumsily type in a complex password every time.

More importantly, mobile-based authentication methods are at the forefront of achieving regulatory changes in MFA, an important first step for passwordless authentication to gain compliance. As regulations adapt to the prevalence of mobile usage, passwordless methods stand ready to meet these evolving demands.

Tech Giants’ Stance on Compliance

If passwordless authentication still seems like a risky innovation, consider that major tech players, like Microsoft, have recognized the importance of investing in alternative authentication methods that improve on password-based ones. Microsoft’s endorsement and integration of passwordless authentication signal a possible shift for other organizations to do likewise, enhancing the likelihood that passwordless authentication will achieve compliance.

Other tech giants have also made significant contributions to include passwordless in the regulatory compliance space. Google and Apple have incorporated biometric authentication into their ecosystems and are experimenting with more passwordless features.

The collective efforts of these industry leaders indicate a shift towards a future where compliance and user-friendly authentication can coexist.

FIDO and Other Passwordless Standards

Fast Identity Online (FIDO), a set of security specifications for strong authentication developed by the nonprofit organization the FIDO Alliance, provides a framework that ensures secure and interoperable authentication methods, including a commitment to open standards for passwordless authentication.

FIDO is outspoken about issues related to password-based authentication. For instance, it publishes statistics on password-based cybersecurity attacks and phishing alongside the benefits of opting for a passwordless solution. FIDO has also worked with the World Wide Web Consortium (W3C) to develop WebAuthn, a standard that enables web applications to use strong, public-key-based credentials for authentication, including biometrics and external authenticators like security keys.

FIDO is becoming a popular passwordless standard for applications looking to move away from password-based authentication. FusionAuth, for example, already ensures its authentication methods are compliant with FIDO out of the box. This shift will likely aid passwordless authentication in becoming more accepted as a safer alternative that is ready for regulatory compliance.

Final Words

Passwordless authentication methods address phishing challenges, enhance user experiences, and enable multi-factor authentication. They have received support from tech giants and standards, like FIDO, and are growing in popularity alongside mobile devices.

So is passwordless authentication ready for compliance? Yes, it is. Passwordless solutions have proven to be more secure and convenient than password-based ones. It’s fast gaining traction and ready to meet regulatory requirements.

FusionAuth allows organizations to embrace passwordless authentication without having to worry about compliance. Its comprehensive identity and access management platform centralizes authentication processes and ensures compliance with industry standards, empowering organizations to implement passwordless authentication seamlessly.