Passwordless Banking: Integrating FIDO2 and Biometric Authentication for Secure and Compliant Financial Services

Abstract

Financial institutions are accelerating the transition from passwords to FIDO2-based authentication to mitigate credential-related breaches and enhance regulatory compliance. This shift removes shared secrets from authentication, eliminating the primary attack vector exploited in credential-driven fraud. This article presents a Blueprint for Passwordless Banking, detailing a phased strategy for deploying FIDO2- and biometric-based authentication in high-compliance environments. The framework covers architectural prerequisites, risk evaluation, customer journey adaptation, and coexistence strategies with legacy multi-factor authentication systems. Practical guidance derives from large-scale banking implementations, emphasizing security gains, reduced credential-reset costs, and measurable improvements in user experience. The proposed model demonstrates how regulated institutions can meet FINRA and PCI-DSS requirements while embracing passwordless paradigms that align with NIST SP 800-63B digital identity guidelines. Financial institutions implementing passwordless strategies report measurable reductions in account takeover incidents, decreased support costs associated with credential management, and enhanced customer satisfaction metrics reflecting streamlined authentication experiences. The regulatory landscape governing financial services authentication has evolved to accommodate passwordless methodologies while maintaining rigorous identity assurance requirements through possession-based authenticators and biometric verification as acceptable alternatives to knowledge-based credentials.