Measuring the ROI of advanced authentication

Security leaders are often asked to defend their spending on authentication investment in terms of defensive outcomes, like reductions in breaches and fraud, or fewer compliance-related fines. While those outcomes do matter, for decision-makers at financial institutions and other organizations where authentication is central to every customer interaction, the business case for advanced authentication goes well beyond risk avoidance.

Instead of asking what the cost is to invest in modern authentication, institutions should consider what outdated authentication is actually costing them. When that question is answered, the return on investment (ROI) for advanced authentication becomes clear.

What authentication ROI really means

Beyond security metrics

Conversations about the ROI of security often involve avoiding losses, whether these are losses from fraud, the impacts of a data breach, or fines associated with compliance violations. These are important metrics, but they’re only part of the full ROI picture.

Seamless, advanced authentication can drive measurable gains in customer conversions by reducing dropouts and increasing ROI through additional customer interactions. Additionally, for organizations where digital trust is a competitive differentiator, like banks, credit unions, payment platforms, and fintechs,  the impact of authentication truly touches every revenue and cost line, due to its impact on long-term brand equity. For most organizations this means there are at least five dimensions ROI can be measured across: fraud loss reduction, conversion and abandonment rate, operational support costs, regulatory/compliance exposure, and customer trust and retention.

This multidisciplinary approach builds a compelling investment case that shows the value of authentication investments across the organization, making it easier to show value to CFOs and boards.

Fraud Loss Reduction Metrics

Preventing Downstream Fraud

Reduction in losses from fraud is the most directly measurable metric for authentication ROI. Account takeovers (ATO) are the dominant threat vector, and they are rapidly increasing: ATO incidents increased 21% year-over-year between H1 2024 and H1 2025, and they’ve surged 141% since 2021, per the Identity Theft Resource Center (ITRC). The associated losses are significant, with more than one-third of institutions that were affected by security incidents reporting direct financial losses that exceeded $500,000.

ATO is so costly because the losses often aren’t contained to the initial breach. Once their session has been authenticated, fraudsters with unfettered access can push wire transfers as well as add new devices, update recovery instructions and more.  If the authentication approach only protects the session at login, all of these actions are available for the fraudsters to set up avenues that allow them to further compromise the account.

Advanced authentication approaches that layer continuous verification and biometric step-up are designed to interrupt these patterns of activity. By re-verifying identity for high-value transactions or account changes, downstream fraud is stopped before it materializes. The key ROI metrics to track here before and after deployment are a reduction in ATO-related losses, decreasing volume of fraudulent transactions, and the organization’s cost per fraud case.

Authentication abandonment and conversion impact

Reducing friction without sacrificing security

Friction during the authentication process is, indeed, a revenue problem. When legitimate customers encounter friction like clunky one-time passwords (OTPs), repeated re-authentication prompts for common tasks, or unnecessarily complex account recovery flows, many of them just give up. In financial services, this directly translates to lost revenue and customer attrition.

Legacy authentication systems often apply maximum levels of friction in a way that can seem indiscriminate to the user. Often, everyone gets the same number of hurdles to cross regardless of their actual risk profile. In advanced authentication, this is resolved: low-risk users will move through seamlessly with no friction, while enhanced verification efforts are deployed when and where risk warrants it.

There are measurable conversion implications here, and organizations that have moved to advanced authentication systems report an improvement in authentication drop-off rates after deployment and improved application and onboarding completion rates, plus revenue impact from reducing abandoned sessions, for example, loss of fees if a percentage of users abandon a wire transfer to do it from their account at another institution after hitting authentication hurdles.

Operational and support cost savings

Fewer account recovery calls

Authentication can also be a significant burden on the contact center. Password resets, account lockouts, and requests that require identity verification generate a large amount of contact center call volume. They’re the most common customer service interactions at financial institutions, and the costs add up – industry benchmarks place the cost of a password reset or account recovery between $15 to $50 depending on the amount of agent time and escalation required.

Advanced authentication directly reduces this operational expense. When users are authenticated via biometrics versus knowledge-based answers (KBA) or passwords they can easily forget, self-service recovery rates are improved dramatically. High-assurance biometric verification also reduces the number of fraudulent account recovery attempts that get escalated to manual agent review. These are among the most expensive and complex of support calls.

To measure ROI of authentication at the contact center level, look at the volume and cost of authentication-related support calls, the self-service resolution rate, and the average handle time for identity-related escalations. When organizations move to modern biometric authentication, they often see double-digit reductions in password/recovery-related call volume early on, showing strong ROI in the first year of deployment.

Compliance and regulatory risk reduction

Avoiding fines and audits

From FFIEC guidance on layered security to PSD2’s strong authentication requirements in Europe, global regulators are becoming increasingly explicit about what “appropriate” authentication protocols look like, and legacy credential-based approaches are unlikely to meet future standards.

The cost of non-compliance is a very real threat. Authentication-related compliance failures can carry several different types of cost: direct fines, mandatory remediation, increased audit pressure, and reputational damage. If a major breach occurs and regulators take a close look at whether adequate controls had been put in place, organizations that are reliant on passwords and SMS OTP may find themselves in a difficult position.

Regulators recognize that advanced authentication, especially high-assurance biometric verification tied to a government ID, provides stronger controls while also creating a documented and auditable chain of identity assurance – which can prove invaluable during regulatory review.

When measuring compliance ROI, consider not only the value of avoiding regulatory fines but the value of paying lower cyber insurance premiums, and the reduction in exposure to enforcement actions and regulatory examinations.

Customer trust and satisfaction metrics

Long-term brand value

The ROI of customer trust is difficult to quantify, but it’s arguably the most important. If a customer’s account is taken over, with their money lost and a painful recovery experience, the damage extends well beyond any immediate financial loss. Research has consistently shown these customers are significantly more likely to close their accounts, move to another financial institution, and to be very unlikely to recommend the institution where they suffered the compromise to others.

In contrast, authentication that’s secure but seamless builds trust in a positive sense. Customers will notice when their bank’s app or automated phone attendant recognizes them quickly and doesn’t make them jump through hoops to perform a transaction, versus a clunky and friction-heavy experience that signals to them that the institution is unsophisticated or doesn’t care about their experience.

In an era where switching banks and payment platforms is in and of itself an increasingly low-friction process, customer trust matters even more as a retention driver. That bad authentication experience on your mobile app can easily trigger customer churn. Advanced authentication provides an improved customer experience by delivering better overall account protection and providing legitimate users a seamless experience. This shows customers that the institution is committed to protecting their account.

Important metrics to track in this area include Net Promoter Score (NPS) trends before and after authentication modernization, customer satisfaction scores for login and verification flows, churn rates (including churn for those who have experienced fraud versus the entire user base), and customer lifetime value as it correlates to authentication challenges.

Taken together, these metrics make it possible for institutions to reframe advanced authentication, making it a value driver instead of a cost center. When you can prove measurable ROI across security, conversion, operations, compliance, and customer trust, the investment case for authentication modernization goes from speculative to demonstrable.

FAQ

How do you measure authentication ROI?

Authentication ROI should be measured across multiple dimensions: fraud loss prevention, improvement in customer conversion and completion rates, reduced authentication-related customer support costs, lower regulatory/compliance fines and exposure, and improvements in customer trust and retention. A robust ROI model will capture all of these categories to measure business impact across the organization.

Does authentication modernization improve customer experience?

Advanced authentication will reduce friction for legitimate users while concentrating the highest hurdles where risk warrants it. Biometric authentication is faster and more intutitive for users than traditional password/OTP flows. When organization modernize authentication, they will typically see measurable improvements in login completion rates, onboarding conversion, and NPS and customer satisfaction scores – all strong indicators of authentication modernization having a positive impact on the overall customer experience.

How long does it take to see ROI?

Many organizations will see measurable ROI impact within months of deploying modernized authentication flows, particularly in terms of fraud loss reduction and contact center support costs. Conversion rate improvements are often quickly visible as well, because users experience the new authentication flow immediately. Longer-term, ROI will accumulate over time in areas like customer trust and brand equity as the institution becomes known for its strong security and seamless customer experiences.