In my country we have a large religious community that eschews smartphones. Due to this no company or government agency requires a smartphone for service.

This is a very good thing. I don't think many people here on HN reject technology, but sometimes no technology is better than one that is not controlled by the user.

No it isn't.

They just use an SMS code instead which is not secure at all.

choosing a wrong alternative does not make mandating spyphones good.

why not distribute hw tokens for purposes like this? it has the least flaws IMO.

would you mind reveal which community and country is this? maybe i can ask them to lobby in my area too...

It's the religious Jews in Israel.