Out-of-band authentication is a type of two-factor authentication that requires a secondary verification method through a separate communication channel along with the typical ID and password.
Out-of-band authentication is often used in financial institutions and other organizations with high security requirements. The practice makes hacking an account more difficult because two separate and unconnected authentication channels would have to be compromised for an attacker to gain access.
One secondary method for out-of-band authentication is the practice of requiring the user to make a phone call from a registered number or respond to an automatically-generated phone call from the institution. For further security, voiceprint technology may be used to provide biometric verification. Another method is to require the user to text a code displayed after login from their registered smartphone to the institution.
Out-of-band authentication secures communications with only a slight increase in complexity for a user. The methods are also much cheaper to deploy than security key fobs or more complex biometric methods.
There are a number of ways that a determined criminal can find a way around out-of-band authentication. For example, a hacker may attempt to get the customer's phone number changed on the account, substituting his own phone number. In this case, the technology's effectiveness depends on the bank adhering strictly to policies against making changes to an account without phone confirmation, or transferring money without that extra authorization.
Smartphones can also be a weak spot in out-of-band-authentication. If people use the same phone for Web banking that they use for SMS authentication, they’re nullifying the effectiveness of the secondary measure. In either case, the effectiveness of out-of-band authentication relies upon adherence to the proper procedures.