Credit: Steve Sauer/NetworkWorld
When Wallaby Financial launches a new version of its app, which helps users maximize rewards and points, later this summer, it will be missing one notable feature: a password.
"We'll authenticate their email address or their phone number," says Matthew Goldman, CEO of Wallaby Financial. "We're going to send them a one-time code to either of those locations, and they'll have to enter that back in the system. You have to prove that you have control of that phone number or email address in order to log into our system."
Then, he says, if the user stays logged in, his phone's authentication system will stand in place of entering a password into the app every single time.
Wallaby Financial is one of many groups trying to get rid of passwords all together. In June, the blogging site Medium ditched passwords, too.
The big reason? Passwords don't really work.
The password problem
"The problem with passwords is most people are very bad at remembering them," says Goldman. "They have too many of them and so they resort to fundamentally insecure behavior in order to deal with the problem of remembering lots of passwords."
According to a survey by Telesign, a mobile identity company, 73 percent of online accounts use duplicate passwords, 54 percent of consumers use five or fewer passwords across their entire life online, 22 percent use three or fewer, and 47 percent haven't changed their password in five years.
"We know it's bad because if one system is hacked, all of your profiles across many systems become vulnerable," says Goldman.
Before our lives moved online, passwords worked. "It was designed in a world where there were maybe three logins in your life," says Boris Jabes, co-founder of Meldium, a password and account manager. "No one I think planned on it becoming how you'd log into 100 plus places in a year or a month."
Passwords aren't just a hassle for website users it's a hassle for developers, too.
"If I'm a corporation, if I'm a website, then I have to build all the infrastructure to manage your password, store them correctly, allow people to forget them," says Jabes. And even that's not perfect. "The whole infrastructure around that is vulnerable. Either people will have weak ones or you will store them poorly and you will become a vector of attack," he says.
Password alternatives now
The password alternative being tested out right now is exactly what Wallaby Financial is doing: two-step authentication, relying on the smartphone and the fact that most people have it with them at all times.
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