Out-of-band (OOB) authentication is mainly used by financial institutions and other organizations with high security requirements to prevent unauthorized access. Out-of-band- helps improve cybersecurity because it makes hacking an account more difficult due to two separate and unconnected authentication channels that would need to be compromised at the same time for an attacker to gain access.
Out-of-Band Device is an authentication device that establishes an additional channel of communication with a 2FA system to receive an authentication request or another type of out-of-band secret.
Out-of-band authentication, as opposed to multi-factor authentication, is a type of 2FA (something you know, such as a password, and something you have, such as a mobile device). The channel used to authenticate a customer in an out-of-band authentication (OOBA) system is completely independent of the channel used by the customer to log in or make a transaction.
Cybercriminals may have access to compromised credentials and can use a laptop to make a transaction. But rarely do they have access to the user’s smartphone to obtain the one-time password required for authorization unless additional means like call forwarding, cloning, or phone theft occurs. The transaction cannot be completed without the OTP. Out-of-band Authentication techniques, such as a fingerprint scan or QR code, could be used instead of an OTP by the company.
Out-of-band passcodes can be delivered in a variety of ways to mobile devices:
If we use a bank as an example, when a high-risk transaction is flagged by a bank’s risk engine, it provides a score that reflects the susceptibility for fraud based on algorithms. A higher risk score triggers higher authentication steps or additional security requirements. This is when out-of-band authentication is used, to challenge the customer to reconfirm the transaction. The risk engine and related score can trigger a change in the authentication workflow in order to send an OTP to a customer’s trusted mobile device for additional verification.
With out-of-band authentication, the possession element is the mobile phone where the user receives an authentication code. The knowledge or inherence element is entered into:
OOB can help prevent Man-in-the-Middle attacks in financial institutions, in which fraudsters position themselves between an institution and the user in order to intercept, edit, send, and receive communications without being noticed. Out-of-band authentication makes attacks much more challenging for hackers or fraudsters because they need to be able to take control of both of the separate communication channels. simultaneously in order to compromise the user authentication process. Fraudsters can take over the communication channel between the user’s device and the bank’s server by setting up a malicious Wi-Fi network as a public hotspot. Even if the customer is on their cellular network, such an attack would be prevented because the fraudster would only have access to one of the channels. Out-of-band authentication is a critical tool for financial institutions to fight fraud.
Rising concerns related to data privacy have also fuelled the demand for Out-Of-Band authentication solutions from businesses handling critical data such as payment card, banking, insurance, healthcare, etc.
Out-of-band can be segmented into these industries:
OOB is a powerful tool used to prevent fraud as the OOB authentication software works with a secured communication channel. For high-risk transactions, enterprises use this technology to verify and authenticate the identity of a user. The technology is used for authentication for both financial and non-financial transactions.