Multi-Factor Authentication: Definition, Use Cases, and Benefits

Traditional single-factor authentication methods, such as usernames and passwords, are increasingly vulnerable to cyberattacks. Multi-Factor Authentication (MFA) is the key to securing these weak authentication systems and combating cyber threats.

Hackers frequently exploit weak password security to gain unauthorized access, leading to financial theft and the loss of sensitive data. In 2022, weak employee passwords were the leading cause of cyber incidents. Moreover, IBM’s 2024 Cost of a Data Breach report highlights compromised credentials as one of the primary causes of data breaches.

Keep reading to learn more about MFA and its critical role in protecting businesses and individuals online.

What is multi-factor authentication?

Multi-Factor Authentication (MFA) is a security process that requires users to provide multiple forms of identification to access a system or resource. Rather than relying on just a single authentication method, like username or password, MFA incorporates additional layers of verification. 

Two layers of verification are referred to as two-factor authentication (2FA), three layers as three-factor authentication (3FA), and so on. All of them fall under the “MFA” umbrella.

These additional layers significantly reduce the risk of unauthorized access, even if one or more factors are compromised.

The different authentication factors

Authentication factors are different ways of verifying an individual’s identity. 

MFA employs at least two factors to make it more difficult for criminals to compromise them.

The four types of authentication factors are:

• Knowledge
• Possession
• Inherence
• Behavioral

Let’s look at each of them.

1. Knowledge factors (what you know)

The knowledge factor requires users to provide information that only they know. 

Examples include PIN codes, passwords, or answers to personal security questions, such as identifying their favorite sport.

2. Possession factors (what you have)

The possession factor verifies a user’s identity through something they have. 

For instance, a One-Time Password (OTP) might be sent to the user’s smartphone or hardware token to be input into the system. Similarly, codes sent via SMS or email can be used for verification. In addition, companies like Google and Microsoft provide various passkeys and authentication apps that function as possession factors.

3. Inherence factors (what you are)

The inherence factor typically involves using unique biometric traits for authentication. 

Common examples include fingerprint scans, retina scans, or facial recognition.

4. Behavioral factors (what you do)

The behavioral factor focuses on analyzing a user’s behavioral patterns. 

This can include assessing their typical IP address or the device they frequently use for authentication. 

For example, a login attempt from an unfamiliar IP address could trigger a block, as it may indicate a security risk. Similarly, a system may block a login attempt that originates from an unregistered device instead of the user’s known devices.

How multi-factor authentication works

Combining different authentication factors enhances the security of a system. 

Here’s how multi-factor authentication might work in practice:

1. The user begins the authentication process by entering their username and password (something they know).
2. Next, the system prompts the user to scan their face using facial recognition (something they are) on their phone.
3. Finally, the user receives a One-Time Password (OTP) via SMS (something they have) and enters it into the system.
4. All authentication steps are completed and the user successfully gains access to the service.

This way, even if one factor is compromised, potential attackers must bypass additional layers of security. The more layers an MFA implements, the more effectively it protects the users from breaches.

According to the U.S. National Cybersecurity Chief, MFA can prevent 80–90% of cyberattacks. Furthermore, Microsoft reports that 99.99% of compromised accounts don’t use MFA, underscoring its critical role in safeguarding systems.

Different use cases for multi-factor authentication

There are several different ways for businesses and organizations to implement and use MFA. Each method affects security, user experience, and cost differently.

1. Always-on approach

This method requires users to verify their identity with MFA every time they log in or access a service. 

While it provides robust security, this always-on approach adds friction for the user by forcing them to repeat time-consuming verification steps, which is especially frustrating for low-risk activities. But this approach ensures consistent protection, even for users who might not otherwise enable MFA.

2. Opt-in approach

The opt-in approach lets users decide whether to enable MFA for their accounts. 

This method is typically used by individuals who want extra protection for less sensitive information. While opting in gives users control over their security preferences, it relies on their willingness to enable MFA, balancing improved security against slightly longer authentication processes.

3. Step-up authentication

In step-up authentication, MFA is only required when users perform high-risk actions or access sensitive information. 

For example, a user might only need a single authentication factor to check their bank account balance, but transferring funds or updating account details would trigger additional verification steps. 

This approach balances security and user convenience by applying MFA selectively.

4. Time-sensitive re-verification

In time-sensitive re-verification, users complete the MFA process upon their first log-in. If they return to the service within a short period from the same device or browser, they won’t need to re-authenticate. This method improves the user experience by reducing repetitive prompts while maintaining security within a defined timeframe.

Each of these approaches can be tailored to specific organizational needs, helping businesses strike a balance between security and usability.

What is adaptive multi-factor authentication?

Adaptive or risk-based MFA adjusts authentication requirements based on the context of the login attempt. 

Unlike traditional MFA, which applies the same criteria for every login, adaptive MFA evaluates variables such as user location, device type, and login behavior to determine the necessary level of security.

For instance, a user logging in from a trusted device on a familiar network might only need to enter their password. But if they try to log in from an unfamiliar location or a new device, they might need to go through additional verification steps, such as a One-Time Password (OTP) or biometric authentication.

Another example is when a user fails multiple verification attempts. This unusual activity can trigger enhanced security measures, such as requiring additional authentication factors or temporarily locking the account.

What are the benefits of multi-factor authentication?

MFA provides several benefits for organizations and users, making it a key part of modern cybersecurity strategies:

1. Enhanced security: Extra authentication layers minimize the risk of unauthorized access if one factor is compromised, protecting both end-users and businesses.
2. Regulatory compliance: Helps organizations meet strict data protection standards.
3. Improved incident response: Alerts administrators to suspicious activity, letting them quickly mitigate breaches.
4. Enables safer remote work environments: Ensures secure access for authorized employees, supporting the trend of remote work across various locations.

What are the limitations and challenges of multi-factor authentication?

While MFA provides strong security, there are clear challenges and limitations to consider: 

1. Hardware loss: If the MFA process requires a physical token or device, there’s a risk of them being lost or stolen. This provides a challenge for users and organizations in terms of replacement and associated costs.
2. Cost implications: Implementing and maintaining MFA systems, especially advanced ones, can be expensive.
3. User experience issues: Users may find frequent multiple authentications inconvenient, worsening the user experience

The future of multi-factor authentication

Due to the rise in cybercriminal activity and its costly impacts, organizations are increasingly adopting MFA in their identity and access management (IAM) strategies.

The MFA market is projected to grow significantly, reaching a value of $40 billion by 2030, with an annual compound growth rate of 18% from 2021 to 2030. 

Currently, adoption rates vary widely by business size: While 87% of large businesses (over 10,000 employees) use MFA, medium-sized businesses (26–100 employees) and small businesses (fewer than 26 employees) are lagging with adoption rates of 34% and 27%, respectively. For MFA to achieve widespread growth, businesses of all sizes must commit to adopting these practices.

The future of MFA lies in balancing security with user convenience. AI will play an increasingly important role in assessing risks and analyzing behavioral patterns to distinguish “normal” from “deviant” activity, enhancing security and ease of use. Additionally, advancements in authentication methods, such as biometrics, will continue to simplify and improve the verification experience.

In conclusion, a safer digital environment requires greater awareness of MFA’s benefits. 

More people must enable MFA wherever possible to protect the data that matters most to them.