Biometric authentication verifies a person using physical or behavioral traits, such as facial recognition or typing patterns. One-time passwords verify access by sending a temporary code to a device or email account. Biometrics are stronger against phishing and credential theft, while one-time passwords are still useful as an added factor but can be weaker if the delivery channel is compromised.
How the two methods differ in financial services
Biometric authentication and one-time passwords solve different parts of the login problem. Biometrics try to verify the person by something they are or do, which makes them harder to steal and reuse. One-time passwords prove access by something you temporarily have, which is easier to deploy but more exposed to interception, relay, and delivery-channel compromise.
In financial services, that difference matters because the threat model is not just “can the user sign in,” but “can the organisation trust the factor under phishing, session hijacking, account recovery abuse, and fraud pressure.” Biometrics usually aim to reduce user friction while improving resistance to credential theft; OTPs are often used as a step-up or fallback factor, especially where legacy systems still depend on codes.
When you compare them operationally, the core trade-off is strength versus reach. Biometrics can be stronger against phishing, but they introduce concerns around template protection, false accepts and rejects, accessibility, and recovery when the biometric cannot be used. OTPs are broadly compatible and familiar, but they depend on the security of the receiving channel and the user not being tricked into revealing or relaying the code.
Where biometric authentication is stronger, and where it is not
Biometric authentication is strongest when the goal is to make sign-in resistant to reuse outside the original interaction. A face scan, fingerprint, or behavioural signal does not behave like a shared secret, so an attacker who phishes a password or code usually has less to steal. That is why biometrics are often discussed alongside phishing-resistant authentication and stronger user verification flows.
The limitation is that biometrics are not magic proof of identity in every context. They depend on capture quality, device quality, and anti-spoofing controls. If the system accepts a photo, replay, injected sensor feed, or low-quality match too easily, the control weakens quickly. Financial services teams also have to think about privacy, storage, and what happens if biometric data is compromised, because you cannot simply issue someone a new face or fingerprint the way you can reset a code.
That is why a biometric deployment needs more than a matching engine. It needs enrolment controls, liveness detection, secure template handling, fallback rules, and a recovery process that does not quietly become the weakest part of the journey. For a practical implementation view, see the Biometric Authentication and Verification Guide.
Where one-time passwords still fit in financial services
One-time passwords remain useful because they are simple, cheap to deploy, and compatible with many banking and payment journeys. They can add a second factor without requiring specialised hardware, and they are still common for step-up checks, recovery, and transitional deployments where passkeys or stronger phishing-resistant methods are not yet universal.
The weakness is that OTPs inherit the security of the channel that carries them. SMS, email, and push-like delivery flows can be phished, relayed, intercepted, or redirected through account compromise, SIM swap, mailbox takeover, or social engineering. In other words, the code itself may be temporary, but the route to the code can be persistent and exploitable.
That is why OTPs are best treated as a compensating control, not as the end state for high-risk access. If a bank or payment provider still uses OTPs, it should understand the delivery channel, lock down resend and recovery flows, and assume that an attacker will try to capture the code in real time rather than steal it later. The practical comparison is captured well in the Authenticator Apps and OTP Guide and the broader MFA Guide.
Standards & Framework Alignment
This section maps relevant standards and security frameworks to the operational risks and controls described in this guidance.
NIST SP 800-63, OWASP ASVS, NIST SP 800-53 Rev 5 and CIS Controls v8 set the technical controls, while ISO/IEC 27001:2022 defines the regulatory obligations.
| Framework | Control / Reference | Relevance |
|---|---|---|
| NIST SP 800-63 | IAL2 — Identity Assurance Level 2 | Biometric and OTP choices affect assurance for user authentication. |
| Recommendation — Use higher assurance and phishing-resistant options where the access risk justifies it. | ||
| OWASP ASVS | V6 — Authentication | The question compares authentication methods and their abuse resistance. |
| Recommendation — Verify authentication flows, recovery, and step-up rules against the required assurance level. | ||
| NIST SP 800-53 Rev 5 | IA-2 — Identification and Authentication (Organizational Users) | Financial services sign-in controls depend on how users are authenticated. |
| Recommendation — Enforce appropriate authentication strength for user access based on sensitivity and risk. | ||
| ISO/IEC 27001:2022 | A.5.16 — Identity management | Identity management governs how authentication methods are assigned and controlled. |
| Recommendation — Define and maintain identity lifecycle rules for authentication factors and recovery. | ||
| CIS Controls v8 | CIS-5 — Account Management | OTP and biometric use is tied to account access and recovery paths. |
| Recommendation — Tighten account access, recovery, and factor reset procedures. | ||
Practitioner Guidance
What to verify: Decide whether the control is being used for primary sign-in, step-up authentication, or account recovery. Those three uses have different risk tolerances, and a factor that is acceptable for low-friction step-up may be too weak for high-value transfer approval or admin access.
Decision rule: If the user population can support it, prefer phishing-resistant methods for high-risk access and treat OTPs as transitional or fallback controls. If OTPs remain in scope, verify the delivery channel, recovery path, and help-desk process with the same scrutiny as the login screen itself.
What practitioners underestimate: The weakest part is often not the factor, but the surrounding process, especially reset, re-enrolment, and channel change. A strong biometric or a short-lived code can still fail if the attacker can influence recovery or intercept the next step in the journey.
Practitioner takeaway: In financial services, the right comparison is not “which factor is easier,” but “which factor remains trustworthy after phishing, recovery abuse, and channel compromise.”
Related resources from NHI Mgmt Group
- When does biometric authentication become a better control than passwords or one-time codes for customer transactions?
- What is the difference between biometric authentication and time-based one-time passwords in privileged access?
- Why do usernames, passwords, and one-time codes create weak assurance in modern authentication flows?
- How should security teams use one-time passwords as part of multi-factor authentication without creating avoidable friction?
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Reviewed and updated by the NHIMG editorial team on November 2, 2026.
NHI Mgmt Group — the #1 independent authority on Non-Human Identity, IAM, and Agentic AI security. nhimg.org