Why OTP is Still a Vital Piece of the Cybersecurity Puzzle?

We’ve seen this trend emerge across countless security reviews: organizations are racing to adopt the latest passwordless technologies, yet OTP, short for one-time password keeps showing up in their authentication stack. Despite the rise of Biometrics and Passkeys, OTP authentication continues to be one of the most widely deployed mechanisms worldwide. From banks and hospitals to cloud software and e-commerce, OTP remains deeply entrenched in how organizations validate user identity.

So why does this decades-old method still hold its ground in 2025? And more importantly, should it? Let’s explore.

What is One Time Password (OTP), and Why Did It Take Off?

Before we begin, let’s review: What is OTP? An OTP is a password that can only be used for a single transaction or login. When attempting to access your email or bank account, you have most likely encountered one through an authenticator app or SMS.

OTP solutions gained a lot of traction in the early 2000s because they solved a fundamental problem with static passwords: they were simple to reuse and steal. On the other hand, OTPs are a simple but powerful defense against unauthorized access because they expire rapidly and can’t be used again.

Even today, OTP remains relevant due to its ease of use and quick scalability.

The Trust Factor: Why OTP Still Matters?

Despite its simplicity, OTP authentication is critical in enterprise security strategies. Users resist complex MFA methods. OTP gives an organization the coverage without creating friction.

OTP offers a middle ground in industries like healthcare, logistics, and education, where technical literacy varies widely. It’s not as strong as Biometrics, Passkeys, etc., but it’s far better than passwords alone.

Let’s look at a few reasons OTP still matters: 

1. Ubiquity and Compatibility

Almost every phone, regardless of brand or model, can receive an SMS or run an authenticator app, making OTP one of the most universally accessible forms of multi-factor authentication.

There’s no need for costly biometric sensors or specialized hardware tokens. It’s a one time authentication solution that scales with minimal effort.

2. User Familiarity

We underestimate how much user familiarity influences security adoption. “People don’t want to be trained. They want to log in seamlessly,” a customer success lead told us last quarter.

OTP has become second nature for most users. That muscle memory translates to fewer helpdesk calls and smoother deployments, critical for scaling security across large workforces.

3. Bridging Legacy Systems

Many businesses still rely on legacy infrastructure that doesn’t support modern standards like FIDO2 or WebAuthn. In such environments, OTP acts as a bridge, bringing stronger security without forcing a rip-and-replace.

The Limitations We Can’t Ignore

Of course, OTP isn’t bulletproof. Some of its biggest strengths, like simplicity and accessibility, also double as its weaknesses.

Here’s where OTP struggles:

• Susceptibility to Phishing: OTPs can be phished. Attackers can trick users into revealing codes via lookalike websites or urgent fake messages.

• SIM-Swap Attacks: SMS-based OTP is particularly vulnerable to SIM-swapping, where an attacker takes control of a user’s mobile number to intercept the OTP.

• Replay Attacks: Although one-time authentication solution, OTPs can still be captured and reused within short windows if attackers act quickly.

It’s essential to be honest about these flaws. We’re in 2025, and attackers have gotten smarter. But so have defenders.

What we see more commonly now is not the abandonment of OTP but rather its layering with additional controls.

OTP in a Modern MFA Strategy

One common misconception among CIOs is that “we need to replace OTP entirely.” But in practice, most enterprises aren’t removing OTP, they’re repositioning it.

OTP is increasingly used as step-up authentication; a second check, only triggered when risk is detected. For example:

• Logging in from an unfamiliar device

• Accessing high-risk systems like finance dashboards or production servers

• Performing sensitive actions like data exports or wire transfers

OTP works well with behavioral analytics, device trust, and biometric checks in these cases.

It’s no longer about choosing OTP or biometrics. It’s about designing adaptive authentication flows that strike the right balance between usability and risk mitigation.

OTP vs. Passkeys: Complement, Not Competition

There’s a lot of buzz around passkeys lately; for good reason. They’re phishing-resistant, built on public key cryptography, and offer a passwordless login experience.

But here’s the reality: passkeys aren’t yet universally supported across all systems and user devices. While they represent the future of authentication, the present still relies on practical backups.

That’s where OTP, whether delivered as a one-time passcode via app or SMS, remains essential. OTP isn’t obsolete. It’s the fallback that keeps everything running.

Best Practices for Implementing OTP in 2025

If you’re still relying on OTP or planning to deploy it more widely, here are some updated best practices:

•  Prioritize App-Based OTP over SMS

SMS OTP should be your last resort. Use authenticator apps like Google Authenticator or AuthX Authenticator that generate time-based one-time passcodes (TOTP) without requiring network access.

• Pair OTP with Device Trust

Use device fingerprinting and geolocation to validate the environment where the OTP request originated. This can help filter out anomalous behavior before OTP is even sent.

• Set Tight Expiry Windows

One-time passwords should only be valid for a short duration, ideally 30–60 seconds. This limits the window of opportunity for attackers in case the code is intercepted.

•  Enable Risk-Based Authentication

Leverage user behavior analytics to decide when OTP is necessary. Don’t use it for every login, use it only when risk signals are triggered.

The Human Element Behind OTP

Security conversations tend to be complicated by protocols, tokens, and algorithms. However, authentication is ultimately a human experience. Imagine this: You manage the IT department at a busy hospital. Your clinicians are always on the go, collecting records, logging into workstations, and attending emergencies. Asking clinicians to constantly utilize biometric readers or remember multiple complicated passwords isn’t feasible in such an environment.

The simplest method of maintaining safe access without slowing anyone down is to send an OTP by text or an app. They receive a code, submit it, and proceed. It’s easy to chase the latest tech. But sometimes, the best solution is the one that fits the context and just works with minimal noise.

Final Thoughts

One-time passwords might not be the flashiest tool in the cybersecurity toolkit, but they remain one of the most practical, proven, and accessible. Yes, OTP has its flaws. But it still earns its place in modern multi-factor authentication strategies when implemented smartly, alongside adaptive controls, device trust, and behavior analytics. So, the next time someone asks, “What is an OTP, and do we still need it?” You’ll know the answer. Absolutely, yes. Just make sure you’re using it wisely.