The Passkey Shift - Passkeys Inevitable Triumph over Passwords

From Passwords to Passkeys — And What Comes Next

This five-part series explores the current state of passkeys and why enhanced implementations, what we call Passkeys+, are essential for meeting the security and compliance demands of bank-grade use cases.

TLDR:

• Passkeys replace passwords with secure, device-based login using biometrics or PIN.
• Backed by Apple, Google, and Microsoft, they’re now built into billions of devices.Adoption is accelerating, consumer platforms like PayPal and Shopify are leading the charge.
• Phishing resistance and ease-of-use make passkeys a rare usability-security win.
• For financial services, Passkeys+ adds device binding, session assurance, and compliance-ready controls.
• The password isn’t dead, but its replacement has already arrived.

How We Got Here

For decades, passwords were the default key to the digital world. Easy to implement and familiar to users, they offered convenience, but at a steep cost. As our digital footprints grew, passwords became both a security liability and a user burden. Complex requirements, frequent resets, and rampant reuse opened the floodgates to breaches, phishing attacks, and endless frustration.

To fill the gap, two-factor authentication (2FA), often in the form of one-time passcodes (OTPs), became standard. But these too were riddled with flaws. Attackers could intercept SMS messages, exploit social engineering tactics, or hijack synced devices. Users were caught in a never-ending loop of friction without assurance.

That’s when passkeys arrived.

The Birth of a New Model

The breakthrough began with WebAuthn, a web standard developed by the FIDO Alliance and W3C. WebAuthn introduced a public-key cryptography framework that replaced "what you know" (like a password) with "what you have" (a device) and "what you are" (a biometric or PIN). This shifted authentication away from secrets and toward possession and presence.

Soon after, Apple, Google, and Microsoft integrated passkey support across their platforms:

• Apple launched passkeys in iOS 16 and macOS Ventura, tied to iCloud Keychain with seamless Face ID and Touch ID sign-ins.
  
  
• Google rolled out passkeys across Android and Chrome, later making them the default login method for Google accounts in October 2023.
  
  
• Microsoft brought passkey capabilities to Windows Hello and extended support through Azure AD and their Authenticator app.
  
  

These changes made passkeys natively available to billions of devices, but infrastructure alone wasn’t enough. The real test was adoption.

Why It Took So Long

Public-key cryptography has existed for decades. What changed?

• WebAuthn unified standards across browsers and platforms.
  
  
• Biometric sensors became ubiquitous on phones and laptops.
  
  
• Momentum from security mandates and user frustration drove urgency.
  
  

It took years of behind-the-scenes alignment — usability research, platform cooperation, and developer readiness — to reach this point. Building secure authentication is hard. Building one people will actually use is harder.

What Makes Passkeys Different

Passkeys aren’t just a better password. They’re a fundamental rewrite of how authentication works:

• No shared secrets: Passkeys are never stored on a server or transmitted, eliminating phishing risks and credential leaks.
  
  
• User-centric login: Sign in with Face ID, a fingerprint, or a device unlock — no typing, no memorizing.
  
  
• Phishing-resistant by design: Since credentials don’t travel across the network, attackers can’t intercept or reuse them.
  
  

This usability-security combo is rare. Passkeys reduce friction while improving protection — something most security tools fail to achieve simultaneously.

Adoption Is No Longer Just Hype

Support from Apple, Google, and Microsoft laid the foundation, but 2025 marks a turning point in real-world passkey adoption.

• An analysis by Authsignal found that 62% of authentication challenges in their 2025 sample involved passkeys, while only 33% used SMS OTPs.
  
  
• Consumer-facing platforms like PayPal, Shopify, Meta, TikTok, BestBuy, and Kayak have rolled out passkey logins, making them accessible to millions of users.
  
  

Just two years ago, fewer than 2% of global consumer logins used passkeys. That number is now growing rapidly as passkeys transition from a novelty to a norm—particularly in ecosystems with strong platform support and intuitive user flows.

The password isn’t gone. But its reign is clearly ending. Passkeys aren’t the future anymore—they’re the present.

Why Financial Services Need Passkeys+

Default passkeys deliver a strong upgrade over passwords but for financial services, that’s only the starting point.

Banks, wallets, lenders, payment providers, and stablecoin payment and adjacent companies operate in high-risk, high-regulation environments. To fully replace outdated methods like SMS OTPs or app-based codes, passkeys need enhancements that go beyond the default spec.

This is where Passkeys+ comes in: an upgraded model designed specifically for financial use cases.

• Device binding ensures that passkeys stay anchored to a known, trusted device, not in a synced cloud account.
  
  
• Context-aware checks allow for dynamic responses based on transaction type, amount, or user behavior.
  
  
• Stronger session assurance adds controls for timeouts, environment checks, and action-specific re-authentication.
  
  
• Regulatory alignment helps meet evolving requirements under standards like PSD2, MAS TRM, and BSP guidelines.
  
  

These controls don’t just improve security—they enable passkeys to be used in real money movement, customer onboarding, and risk-sensitive workflows without sacrificing user experience.

Passkeys+ is how financial platforms make modern, invisible authentication bank-grade—not just secure, but trusted enough to power the future of finance.

The Road Ahead

Passkeys are the new foundation for digital identity. The old playbook,  built around passwords and OTPs, is no longer sufficient for a connected world.

To reach full potential, we need:

• More companies to prioritize passkey integration.
  
  
• Fallbacks and recovery that don’t reintroduce old risks.
  
  
• User education that makes passkeys feel familiar, not foreign.
  
  

In just over two years, we’ve gone from technical concept to platform ubiquity. Now comes the most critical phase: mainstream adoption.

At Ideem, we’re building on this new foundation, extending the core capabilities of passkeys to meet the visibility, control, and assurance standards that financial services demand. Our approach enhances what passkeys already do well, while adding the device integrity, session confidence, and compliance-ready tooling that banks, wallets, and payment platforms need.

Sources:

• FIDO Alliance: https://fidoalliance.org/fido-authentication/
  
  
• FIDO Alliance: https://fidoalliance.org/biometric-update-state-of-passkeys-2025-passkeys-move-to-mainstream
  
  
• WebAuthn Overview: https://webauthn.io/
  
  
• Google Passkeys: https://blog.google/technology/safety-security/the-beginning-of-the-end-of-the-password/
  
  
• Apple Developer Docs: https://developer.apple.com/passkeys/
  
  
• Microsoft Blog: https://www.microsoft.com/en-us/security/blog/2021/09/15/the-passwordless-future-is-here/
  
  
• 1Password Survey: https://blog.1password.com/passkey-survey-2023/
  
  
• Dashlane Adoption Report: https://www.dashlane.com/blog/passkeys-future-passwordless/
  
  
• FIDO Developer Challenges: https://media.fidoalliance.org/wp-content/uploads/2023/05/FIDO-Developer-Challenges-Report-May2023.pdf

‍