The Central Bank of the UAE has drawn a line in the sand. By March 2026, the era of the SMS and One-Time Passwords will be over for the nation’s financial institutions.

This is not a minor policy tweak. It’s a seismic shift.

For years, the SMS/OTP has been the default security blanket for digital banking. A familiar, but flawed, solution. But the CBUAE’s directive acknowledges a harsh reality: in the face of sophisticated phishing, SIM-swapping, and social engineering attacks, this legacy method has become a critical liability. It creates unacceptable financial and reputational risk.

For the C-suite in the UAE’s banking sector, it’s easy to view this as another compliance burden. Another costly, complex project to manage. But that’s a limited view. The leaders who will win the next decade of digital banking will see this mandate for what it truly is: a strategic inflection point. This is your opportunity to leapfrog the competition by building a digital experience that is not only radically more secure, but also profoundly simpler for your customers.

Phishing-Resistant Passkeys: The Secure Alternative to SMS OTP

The CBUAE recommends a move toward robust, risk-based authentication. The golden standard that unequivocally answers this call is passkeys.

Passkeys are not just an incremental improvement. They represent a fundamental change in authentication technology, offering a rare combination of superior security and a user experience that is genuinely effortless. Built on FIDO standards, passkeys replace passwords and OTPs entirely. They use the biometrics already built into your customers’ devices, like Face ID or a fingerprint, to create a login experience that is fast, familiar, and frictionless.

So, why are passkeys the definitive solution to the CBUAE mandate?

• They are Inherently Phishing-Resistant. A passkey is cryptographically bound to your bank’s specific website or app. There is no password to steal, no code to intercept. The primary attack vector for financial fraud is neutralized at its source, directly protecting your customers and your firm’s bottom line.
• They Create a World-Class Customer Experience. No more waiting for delayed SMS messages. No more frustrated calls to the help desk. A frictionless, biometric login increases digital channel adoption, boosts customer satisfaction, and builds loyalty in a fiercely competitive market.
• They Lower Your Operational Costs. The business case is undeniable. You can immediately eradicate the significant and rising costs of SMS delivery. More importantly, passwordless authentication slashes password-related help desk inquiries, lowering your total cost of ownership (TCO) and freeing up valuable IT resources to focus on innovation, not resets.

From Onboarding to Transactions: A CIAM Approach to Customer Identity

True digital leadership isn’t just about a secure login. It’s about securing the entire customer relationship. This is where HYPR’s Customer Identity and Access Management (CIAM) solution extends the power of passkeys across the entire user journey.

Our unified framework allows you to:

• Onboard Customers with Trust: Securely register new customers and establish confidence from the very first interaction, accelerating their transition into high-value digital clients.
• Deliver Effortless Authentication: Provide a consistent, best-in-class login experience across all your digital properties, reinforcing your brand’s commitment to innovation and security.
• Protect High-Value Transactions: Implement seamless, biometric step-up authentication for sensitive actions, preventing fraud without adding frustrating friction for your legitimate customers.

The HYPR Advantage: Proven Results and Accelerated Time-to-Market

Navigating this transition requires more than just new technology; it requires a proven, globally-deployed partner.

HYPR is not a startup testing a new theory. We are the trusted identity partner to the world’s most demanding financial institutions, including two of the four largest US banks. Our FIDO-certified solutions are architected for the scale, reliability, and security your institution demands. And with our flexible SDKs and APIs, we enable rapid integration with your existing infrastructure, ensuring you lead the market in this transition, not follow it.

Conclusion

The CBUAE’s SMS OTP ban is far more than a compliance requirement — it’s a turning point for the UAE’s financial sector. Institutions that treat it as a checkbox exercise will fall behind, while those that embrace phishing-resistant passkeys will gain a lasting competitive edge.

Now is the time to act. With the March 2026 deadline fast approaching, early movers will be the ones to set the standard for secure, passwordless digital banking in the region.

Related Resources

• Preventing Social Engineering Attacks on the Helpdesk
• Best Practices for Identity Proofing in the Workplace
• NIST SP 800-63-3 Review: Digital Identity Guidelines Overview
• Passwordless MFA Security Evaluation Guide

*** This is a Security Bloggers Network syndicated blog from HYPR Blog authored by Joshua Gonzales. Read the original post at: https://blog.hypr.com/the-cbuaes-sms-and-otp-ban-is-a-golden-opportunity