A couple of months back, I advocated killing your password policies and applying some other techniques instead to make existing use of passwords more effective (including my hobby horse: take the user-experience sting out of rotating ordinary static passwords by pushing them out to users on an alternate channel, à la activation codes and other OTPs). But adding factors is still a great idea, and the barriers to doing so are falling fast.
It has finally become hip not just to predict the demise of passwords, but to call for their elimination. The recent Wired article makes an eloquent case about the vulnerabilities that even "strong" passwords are subject to, such as social engineering and outright theft. And strength is, of course, relative and subject to degradation: The latest computer hardware can make short work of cracking more-complex secrets.
It's true: Static shared secrets are sitting ducks. But passwords are too useful to go away entirely, both because it's handy to be able to synchronize authenticator data between cooperating systems (and people), and because people find using passwords to be less invasive, fiddly, or personally identifying than a lot of other options. So I don't buy the whole "the era of passwords is over" thing. They will be at least one important element of authentication strategies for the foreseeable future -- it's a rare multi-factor authentication strategy that doesn't include a password or PIN somewhere along the line as one of the "things you know."
So, if that's our reality, let's think outside the box in using them. In talking with Mike Gualtieri recently as part of his TechnoPolitics podcast series, I mentioned a few ideas. I had thought of these as pet password peeves, but on the cusp of 2013, why not be positive and think of them as resolutions?
Many IT end-user companies deployed hard tokens at a time when intermediate-risk choices were thinner on the ground, and some of these companies would have benefited from a more granular approach anyway. In general, we are seeing companies moving towards risk-based authentication augmented by mobile soft tokens (sometimes called from a mobile application through an API). These software-only solutions are easier and cheaper to deploy, particularly if the target population is on smartphones, and a lot easier to patch in case of an attack. Interestingly, risk-based authentication is now asked about not only in the B2C context (which was a norm about a year ago), but also in the B2E context as well. Right now, end-user companies are thinking about:
How they can ditch hardware tokens altogether; and
How can they can move risk-based authentication, and increasingly authorization (fraud management), into the cloud.