[informatimago]

The software equivalent would be a TEE (Trusted Execution Environment), but it relies on hardware support. Only a few arm processors and a few Android phone support this option. Apple has its secure enclave, but you cannot download trusted application in it, only Apple can do that.

A 100% purely software solution can be built based on white box encryption. It's slower and may be more easily attacked than a hardware protection (you never know if/when some genius mathematician or physician (quantum cryptographic attacks) breaks your encryption. But it has the advantage that it can run on all devices. cf. eg. https://www.trustonic.com/solutions/trustonic-hybrid-protect...

Then of course, there's the problem of key management and distribution thru software. Using a physical token has several good security properties. Replicating them in software (encryption) is difficult and error-prone. For end users, and service provides, it's much easier to swap a SIM card, than to install securely cryptographic keys and authentication tokens into his trusted execution environment even with the help of well written software.