The Passwordless Revolution: How Passkeys Went From Pilot to Mainstream in 2025

For nearly 60 years, the password has been the foundation of digital identity. The first computer password was implemented at MIT in 1961. Everything since — from PIN codes to SMS OTPs to authentication apps — has been a layer built on top of that same shared-secret model. And that model is fundamentally broken.

Passwords can be phished. They can be stolen from servers. They can be guessed, reused, and sold in bulk on the dark web. The Verizon 2024 Data Breach Investigations Report found that one in two breaches traced back to compromised credentials. Not malware. Not zero-days. Passwords.

Passkeys change the model completely. Built on the FIDO2/WebAuthn standard, a passkey never involves a shared secret — the private key never leaves the user's device, the server never sees it, and it's cryptographically bound to the specific website it was created for. A passkey created for your bank cannot be used on a phishing copy of your bank. It can't be stolen from a server breach. It can't be spray-attacked.

2025 was the year this technology graduated from "promising standard" to "deployed at scale." Here's how it happened.

The FIDO Alliance announced that its annual Authenticate conference — the premier event for passwordless authentication — will expand to Asia-Pacific for the first time, with an event scheduled for June 2026. The move reflects the rapid pace of passkey adoption and regulatory mandates across the APAC region, particularly in Japan, South Korea, Singapore, and India.

The FIDO Alliance simultaneously continued advancing its Credential Exchange Protocol (CXP/CXF) specifications — technical standards that allow users to securely transfer passkeys between different password managers and platforms. This "portability" piece has been one of the practical barriers to passkey adoption: users who switch devices or platforms have historically struggled to move their passkeys. CXP resolves this.

What it means: The APAC expansion is a geographic signal — passwordless adoption is genuinely global, not a Silicon Valley phenomenon. The CXP specification maturation is a practical signal — the last major friction point in enterprise passkey rollout (credential portability) is being systematically resolved.

Source: FIDO Alliance Announcements, FIDO Passkey Index 2025, Early 2026

Major UAE financial institutions — including Emirates NBD, ADIB, and First Abu Dhabi Bank — completed the transition away from SMS and email one-time passwords for customer authentication, ahead of a Central Bank of UAE deadline of March 31, 2026.

The UAE Central Bank's directive, issued in June 2025, required all licensed financial institutions to eliminate SMS and email OTPs as primary authentication factors. Banks began the transition in July 2025, and by year-end, the country's major institutions had moved customers to app-based authentication using passkeys or device-bound FIDO2 credentials.

This makes the UAE one of the first countries to formally mandate the retirement of SMS OTP at a national level — a move that security experts have long argued is overdue given the vulnerability of SMS to SIM-swapping attacks.

Other upcoming regulatory deadlines now on record:

What it means: Regulatory mandates are the strongest possible driver for enterprise technology adoption. When regulators mandate elimination of SMS OTP — as the UAE has done — CISOs are no longer debating whether to migrate to passkeys. The question becomes how fast and what to migrate to. Other central banks and financial regulators worldwide are watching the UAE model closely.

Source: Authsignal, UAE Central Bank Directive, January 2026

The FIDO Alliance announced the formation of a new Digital Credentials Working Group tasked with extending the passkey/FIDO2 standard into verifiable digital credentials — cryptographically signed, privacy-preserving digital equivalents of government IDs, diplomas, professional certifications, and more.

This represents the FIDO Alliance's recognition that the problem they're solving — how do you prove who you are without sharing a secret? — applies not just to authentication but to the entire credential ecosystem. A digital driver's license, a university degree, or an employment record should be as phishing-resistant as a passkey.

The working group includes coordination with the EU Digital Identity Wallet initiative, W3C Verifiable Credentials standards, and emerging national digital identity programs in multiple countries.

What it means: The FIDO Alliance is expanding its scope from "authentication without passwords" to "identity without centralized intermediaries." This is the long-term vision of self-sovereign identity applied to mainstream consumer and enterprise contexts — and it signals that passkeys are the foundation layer, not the end state, of the passwordless movement.

Source: FIDO Alliance Announcements, December 2025

The FIDO Alliance released its landmark Passkey Index 2025 — the first comprehensive, industry-backed benchmark of passkey business performance, developed in collaboration with digital identity consultancy Liminal.

Key findings from the Index, drawing on data from Amazon, Google, Microsoft, PayPal, Target, and TikTok:

Authentication performance:

Business impact:

Adoption scale:

The Index reframed the passkey conversation from security improvement to business value — speaking in the language of product managers, CFOs, and marketing executives rather than CISOs alone.

What it means: The 30% conversion lift is the most powerful data point in the history of passwordless advocacy. Security arguments alone rarely move enterprise budgets at speed. Business performance arguments do. By quantifying revenue impact, the FIDO Alliance has given every product manager in every consumer-facing business a compelling ROI case for passkey adoption.

Source: FIDO Alliance Passkey Index 2025, ID Tech Wire, November 2025

HID/FIDO joint research published in October 2025 revealed that 87% of enterprises surveyed in the US and UK had either deployed or were actively deploying passkeys for workforce authentication — a jump of double digits from prior year measurements.

Major enterprise deployments confirmed in 2025 include:

The deployment pattern is consistent: enterprises start with high-risk user groups (admins, privileged users) and expand. The rollout is typically staged over 2-3 sprint cycles — far faster than the 6-month migrations of previous authentication technology transitions.

The main remaining challenge is legacy system compatibility. Cloud Security Alliance research found that 71% of enterprises still struggle to apply modern SSO and MFA to legacy applications. Passkeys face the same headwind — but the enterprise IAM vendor community has responded with "identity fabric" approaches that allow passkey authentication to work alongside legacy systems during migration.

What it means: 87% enterprise deployment intent, up double digits in one year, is definitional mainstream adoption. The technology has crossed the chasm from early adopter to early majority. The legacy compatibility challenge is real but increasingly solvable — which means the 13% of non-deploying enterprises are primarily a procurement and migration timing question, not a "will we ever" question.

Source: HID/FIDO Research, Cloud Security Alliance, October 2025

On May 1, 2025 — World Passkey Day — Microsoft announced that passkeys would become the default authentication option for all new Microsoft accounts. The change triggered a 120% increase in passkey-based authentication across Microsoft's platform.

Microsoft CEO John Bennett framed the ambition clearly: "Zero passwords should be the goal, and we're certainly moving towards a point where the password begins to disappear."

The same day, the FIDO Alliance released its World Passkey Day 2025 consumer research showing 75% of global consumers are now aware of passkeys — the highest awareness figure ever recorded. Crucially, 69% of people who know about passkeys have at least one — suggesting that awareness and adoption are closely correlated.

The World Passkey Day 2025 announcements came from across the ecosystem:

What it means: Microsoft making passkeys the default is the most significant enterprise signal since Google's announcement. Microsoft's enterprise footprint — Microsoft 365, Azure Active Directory (Entra ID), and Teams — is deployed at essentially every large organization on earth. When Microsoft sets a default, enterprises inherit it. This is not a pilot — it's a platform-level commitment to password elimination.

Source: Techpression, FIDO Alliance World Passkey Day 2025 Report, Microsoft, May 2025

The first quarter of 2025 saw significant regulatory movement on authentication standards across multiple jurisdictions:

NIST SP 800-63-4 (Draft) — The updated Digital Identity Guidelines explicitly cited synced passkeys as phishing-resistant authentication, providing federal agencies and their contractors with a standards-based mandate to adopt passkeys for high-assurance use cases. This is the first time NIST has specifically endorsed synced passkeys (as opposed to only hardware-bound FIDO keys) for regulated use.

PCI DSS v4.0 — Implementation deadlines in 2025 brought the payment card industry's phishing-resistant MFA requirements into force for in-scope environments. Passkeys qualify as PCI DSS-compliant phishing-resistant authentication, accelerating adoption among retail and financial services organizations.

EU eIDAS 2.0 — The updated EU electronic identity regulation advanced the EU Digital Identity Wallet initiative, with FIDO2-compatible credentials playing a central role in the architecture. Member states have until end of 2026 to provide compliant digital identity solutions to their citizens.

What it means: The convergence of NIST, PCI DSS, and EU regulatory frameworks around FIDO2/passkeys creates a "compliance forcing function" — organizations that are slow to adopt passkeys will face audit findings, increased cyber insurance premiums, and competitive disadvantage in regulated markets.

Source: NIST, PCI Security Standards Council, European Commission, Q1 2025

To appreciate how far passkey adoption has come, it helps to understand the scale of the problem it's solving:

The password problem isn't a niche security concern. It's the central vulnerability of digital identity, and it's been known and unaddressed for decades because every alternative involved too much user friction or too much enterprise complexity. Passkeys finally solve both.

UAE Deadline Compliance (March 31, 2026) — The UAE Central Bank's mandate for elimination of SMS OTP in financial services hits its enforcement date. Watch for details on compliance rates and any enforcement actions — this will signal whether national mandates are credible and how other regulators will follow.

India & Philippines Regulatory Updates (April–June 2026) — Two major APAC markets hit their authentication regulation deadlines in mid-2026. Combined, these markets represent over 1.5 billion people and massive enterprise footprints.

FIDO Credential Exchange Protocol Finalization — The CXP/CXF specifications that allow secure passkey transfer between platforms are expected to finalize in 2026. This removes the last major friction point for enterprise passkey rollout (credential portability) and will accelerate adoption among organizations still hesitant due to vendor lock-in concerns.

Passkeys in Privileged Access Management (PAM) — Enterprise adoption of passkeys for standard users is accelerating. The next frontier is phishing-resistant authentication specifically for privileged/admin access — a more complex environment involving shared accounts, break-glass credentials, and legacy systems. Watch for PAM vendors announcing FIDO2 support for their vaulting and session management products.

The First Major Bank to Announce Password-Free Customer Authentication — A globally significant financial institution publicly committing to full password elimination for retail banking authentication will be a landmark moment that triggers competitive responses across the sector.