OAuth 2.0 is introduced in the PSA email parser for Office 365 in response to Microsoft’s lifecycle announcement, in which they indicate that they will begin deprecating Basic Authentication. When using the Basic/Legacy Authentication application sends a username and password with every request, the Exchange service account is granted access to relevant mailboxes using the Application Impersonation role. With Modern Authentication, full access to all mailboxes permission is granted to the PSA application as part of the consent flow. Modern Authentication is based on the OAuth 2.0 protocol which is a token-based authentication, this design ensures that your global administrator credentials are never stored in PSA for mail parsing.
With token-based authentication, users would enter their username and password to get a token. This token provides access to the resource for a specific time period. The token is auto-renewed as long as the credentials entered in the parser settings are still valid.
Here is a link to an article that will help you set this up:
