The History of MFA: How Multi-Factor Authentication Evolved From Bank Tokens to Passkeys

The History of MFA

Multi-factor authentication feels like a modern security requirement, but the idea behind it is decades old. Long before “MFA” was a term security teams used in board meetings, banks, universities, and government agencies were already combining something you know with something you have to control access. Understanding that history isn’t just trivia. It explains why today’s standards look the way they do, and why the industry keeps moving away from the methods it once relied on.

Here’s how multi-factor authentication evolved from analog controls to passkeys, and what that evolution means for businesses choosing an authentication strategy today.

What Is Multi-Factor Authentication?

MFA requires two or more independent proofs of identity before granting access: something you know (a password or PIN), something you have (a device or token), and something you are (a biometric trait). For a deeper breakdown of how these factors work together, see our complete guide to multi-factor authentication, or explore OmniDefend’s MFA solution to see the factors in action.

Before Computers: The Analog Roots of MFA

The logic of MFA existed before digital systems did. Physical keys and ID badges (something you have) were paired with signatures or guard recognition (something you are) to control access to secure facilities, bank vaults, and classified records. Law enforcement used fingerprints for identity verification as early as the 19th century, and secret phrases or passphrases served as an early “something you know” factor in military and diplomatic contexts. None of this was called “authentication factors” yet, but the underlying principle, layering independent, hard to fake proofs of identity rather than relying on a single credential, is exactly what modern MFA later formalized into a repeatable standard.

The 1960s to 1980s: Passwords, Time Sharing, and the First Tokens

Computer passwords trace back to MIT’s Compatible Time Sharing System in the early 1960s, built to separate multiple users on a shared mainframe. As organizations connected more systems, a password alone proved too weak on its own. Automated teller machines, introduced in London in 1967 and New York in 1969, paired a physical card with a PIN, an early, large scale example of possession and knowledge factors working together. Through the 1970s and 1980s, businesses and government agencies began pairing passwords with physical tokens for higher security systems, laying the groundwork for dedicated hardware authenticators.

The 1990s to 2000s: OTPs, Online Banking, and “Two Factor” Goes Mainstream

The 1990s brought one time password (OTP) generators, devices that produced a new code every 30 to 60 seconds, making stolen credentials far less useful to an attacker. As online banking grew, banks became early enterprise adopters of what was then called “two factor authentication,” since financial fraud gave them the clearest incentive to move first. Consumer awareness followed slowly: press coverage of two factor authentication started appearing in mainstream outlets by the mid-2000s, at a time when many Americans still didn’t have broadband internet. Adoption outside banking was clunky and expensive, since every employee or customer needed a physical token, and losing one meant a support call and a replacement shipment. Even so, the security case was already clear: a stolen password alone was no longer enough to compromise an account.

2004 to 2013: Open Standards Arrive

The next leap came from standardization. The Initiative for Open Authentication (OATH) began developing open OTP standards in the mid-2000s, producing HOTP and later TOTP, the algorithms that still power apps like Google Authenticator today. (See our breakdown of HOTP vs. TOTP if you’re deciding between them.) In parallel, laptop manufacturers started shipping built in fingerprint readers, and around 2012 to 2013 a group of technology companies formed the FIDO Alliance specifically to reduce the industry’s reliance on passwords altogether, a mission that would shape the next decade of authentication.

The 2010s: Smartphones Take Over

The smartphone changed MFA’s economics overnight. Instead of issuing a separate hardware token, businesses could deliver one-time passwords by SMS or push notification straight to a device employees already carried, cutting both deployment cost and support overhead. Push based approval reduced login friction to a single tap, while biometric sensors went mainstream on consumer devices: Touch ID arrived in 2013, Face ID in 2017, and fingerprint authentication shifted from a niche enterprise feature to something most people used daily to unlock their phone. For the first time, strong authentication didn’t require the user to carry anything extra, since the device they already owned became the second factor.

Mid-2010s: Regulators Push Back on SMS

Convenience came with a cost. As SIM swapping, number porting, and SMS interception attacks grew more common, NIST’s Special Publication 800-63B (2017) formally downgraded SMS and phone based one time passwords to a “restricted” authenticator category, still permitted, but only with documented risk assessment and mitigation, such as confirming the registered number is tied to a specific physical device. That guidance has been reaffirmed and refined in subsequent revisions and remains the reference point most compliance frameworks point to today when evaluating whether SMS is an acceptable MFA factor for sensitive systems. The same update also barred security questions as a standalone authentication method, closing off another weak link that had lingered from the early 2000s.

2018 to 2022: FIDO2, WebAuthn, and the Push Toward Passwordless

In 2018, the FIDO Alliance and the World Wide Web Consortium jointly launched FIDO2, a standard built on public key cryptography rather than shared secrets, so there’s no password or code for an attacker to steal or phish in the first place. Our guide to FIDO2 standardized authentication covers how the standard actually works under the hood. Initially, FIDO2 lived mostly in hardware security keys, useful, but not something most consumers were going to buy and carry.

2022 to Today: Passkeys and Risk Based Authentication

That changed in 2022, when Apple, Google, and Microsoft jointly announced support for “passkeys,” a software based implementation of FIDO2 that syncs across a user’s own devices without extra hardware. Industry survey data from 2024 found that more than half of people had already enabled a passkey on at least one account. Our enterprise guide to passkeys walks through what that shift means for workforce deployments specifically. Alongside passkeys, adaptive and risk based authentication, which factors in device, location, and behavior before deciding how much verification to demand, has become standard in modern MFA platforms, including approaches like behavioral biometrics.

Where OmniDefend Fits Into MFA’s History

OmniDefend’s own story tracks this evolution closely. Softex, OmniDefend’s parent company, was among the first vendors to ship biometric single sign-on with its OmniPass product back in 1999, with more than 100 million licenses shipped since. In 2021, that legacy became OmniDefend, a standards based identity and access management platform supporting OTP, push, biometrics, and smart card authentication alongside FIDO2/WebAuthn in one deployment, available on premise or in the cloud. OmniDefend also extends this same authentication stack across industry specific deployments for healthcare, financial services, and government, and full pricing details are available for teams ready to compare plans.

What’s Next for MFA

The next phase looks less like a new factor and more like less friction: continuous, presence based verification instead of repeated login prompts, and AI assisted risk scoring that adjusts requirements in real time based on anomalous device, location, or behavior signals. Credential theft and phishing remain among the most common paths into a breach, according to recent industry breach analyses, which is exactly why the factors resistant to phishing, like passkeys and hardware bound credentials, are the ones gaining ground fastest. The constant across every era, though, hasn’t changed. A password alone has never been enough on its own, and every decade of MFA history has been a response to that same fact.

Secure Your Business With Modern MFA

Six decades of authentication history point to the same conclusion: layered, standards based verification consistently outperforms passwords alone. OmniDefend’s MFA platform brings that full evolution, OTP, push, biometrics, and FIDO2/WebAuthn, into a single deployment you can run on premise or in the cloud. Start your 30-day free trial and see how modern MFA fits your organization, no credit card required.

Frequently Asked Questions

1. When did multi-factor authentication start? 

The concept dates to the 1960s and 1970s, when organizations began pairing passwords with physical tokens. ATMs combining a card and PIN launched in 1967. Modern MFA, as an IT security category, took shape in the 1990s and 2000s with the spread of OTP tokens and online banking.

2. What was the first form of MFA? 

The earliest digital examples combined a password (“something you know”) with a physical token or card (“something you have”), following the same knowledge and possession pairing used by early ATMs.

3. What’s the difference between 2FA and MFA? 

Two factor authentication (2FA) uses exactly two verification factors. Multi-factor authentication (MFA) is the broader term and can involve two or more factors, including combinations of knowledge, possession, and biometric verification.

4. Are passkeys replacing traditional MFA? 

Passkeys are becoming a preferred method within MFA strategies because they use public key cryptography and resist phishing far better than passwords or OTPs. Most organizations are layering them in alongside existing factors rather than ripping out other methods overnight, especially during migration periods when not every user or device supports passkeys yet.

Is SMS-based MFA still safe to use? 

SMS MFA is still far better than no MFA at all, but NIST classifies it as a “restricted” authenticator due to SIM swap, number porting, and interception risks. Where possible, authenticator apps, push notifications, or passkeys are the stronger choice, particularly for privileged accounts and financial systems.

Why does MFA history matter for choosing a solution today? 

Every shift in MFA’s history happened because attackers caught up with the previous method: tokens got phished, SMS got intercepted, passwords got stolen at scale. Choosing a platform that already supports multiple standards (OTP, push, biometrics, FIDO2/WebAuthn) means you’re not locked into whichever method becomes the next weak link.

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