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Federated Identity Management (FIM) is a model that enables companies with several different technologies, standards and use-cases to share their applications by allowing individuals to use the same login credentials or other personal identification information across security domains.
The main purpose of federated identity management is to allow registered users of a certain domain to access information from other domains in a smooth way without having to provide any extra administrative user information.
Techopedia Explains Federated Identity Management
The growth in identity management challenges, specifically cross-company, cross-domain issues, has led to the evolution of a new approach to identity known as federated identity management.
As a system, FIM allows individuals to sign on to the networks of different enterprises using their personal identification information or login credentials to access data. The partners in an FIM system are responsible for authenticating their respective users and for vouching for their access to the networks. Federation is achieved using open industry standards or openly published specifications in order to enable multiple users to access common use cases.
A company must always trust its partners to vouch for their users, in this situation, Security Assertion Markup Language (SAML) may be used. SAML instantly recognizes whether a prospective user is a machine or a person and also defines the access that a particular machine or person can have.
Federated identity management allows companies to share applications, regardless of the need to adopt the same technologies for authentication, directory services and security. One the biggest advantage of FIM is that it allows companies to have their own directories and also safely exchange data. The use of identity federation standards can help to minimize costs by eliminating the need to develop proprietary solutions. Organizations need to identify and authenticate users only once, which increases security and lowers the risks associated with authentication of identity information several different times. The FIM also contributes toward improving privacy compliance by effectively controlling user access to information sharing. The end-user experience can also be improved by eliminating the need for new account registration.
Identity federation can be achieved in several different ways, which include SAML specification, OpenID, Higgins trust framework and information cards.
