What is federated identity?

Nowadays, businesses and individuals rely increasingly on multiple systems, applications, and services across different domains. Remembering different passwords for all these domains is a pain and a security risk, and passwordless authentication has yet to find the perfect solution to the password problem.

This is where federated identity comes in. By allowing users to authenticate and access resources across multiple systems using a single set of credentials, federated identity simplifies authentication and enhances security.

In this article, we will discuss how federated identity works, its benefits and challenges, and how it differs from SSO and social logins.

How does federated identity work?

Federated identity is a method of identity management that allows users to access multiple applications or systems using a single set of credentials across different domains or organizations. Users authenticate once with an identity provider (e.g., Google, Microsoft, or Okta) and are authorized to use a wide range of services (e.g., Salesforce, Slack, or AWS) without needing to log in again.

In essence, federated identity enables the creation of a trusted relationship between different identity providers, so users can use their credentials from one domain to access services in another without having to remember multiple usernames and passwords. In other words, it enables users to "federate" or share their identity across different platforms without each platform storing their login information.

One real-world example of federated identities is when a user logs into Spotify or LinkedIn with their Google account credentials. This is possible because Spotify and LinkedIn have a federated agreement with Google.

Federated identity systems rely on established protocols such as Security Assertion Markup Language (SAML), OAuth, and OpenID Connect.

Here’s how federated identity works:

1. The user attempts to access a resource hosted by a service provider (SP).
2. If the user is not already authenticated, they are redirected to a trusted identity provider (IdP) for authentication. The identity provider could be a centralized login system or a third-party service like Google, Facebook, or Microsoft.
3. The identity provider authenticates the user by verifying their credentials.
4. Once authenticated, the IdP generates an OAuth token or a SAML assertion (depending on the protocol used) and sends it to the service provider.
5. The service provider validates the token and grants the user access to the requested resources without requiring them to log in again.

Benefits of federated identity

Federated authentication offers a range of benefits for organizations and users alike. Let’s explore some of the key advantages:

• Simplified user experience: It eliminates the need for users to remember multiple passwords, reducing friction and the likelihood of password fatigue. Users only need to log in once to gain access to multiple services, making it far more convenient.
• Improved security: Fewer passwords, fewer problems. Federated identity minimizes the exposure of user credentials across various platforms by centralizing user authentication in a trusted IdP.
• Cross-domain access: Federated identity makes it easier to collaborate across organizations or access external applications (such as cloud services) without compromising security. Organizations can maintain their internal identity systems while allowing secure access to third-party resources.
• Cost and administrative savings: Federated identity reduces the administrative burden on organizations, as they do not need to manage separate credentials for each system or service. Users benefit from fewer login credentials to remember and manage.

Challenges of federated identity

While federated identity offers numerous benefits, there are some challenges to consider:

• Integration complexity: Setting up federated authentication can be complex, especially for legacy systems that may not support modern federation standards like SAML or OAuth.
• Security risks: While federated identity can improve security, it can also introduce risks if the identity provider is compromised. A breach at the identity provider could potentially give attackers access to all systems relying on that IdP.
• Single point of failure: If the IdP goes down or is compromised, all linked services may become inaccessible, which highlights the importance of maintaining a highly available and secure IdP.
• Vendor lock-in: Some organizations may be concerned about becoming dependent on specific identity providers, which could lead to vendor lock-in. This might limit flexibility when selecting or switching identity providers in the future.

Federated identity vs SSO

While SSO and federated identity allow access to multiple apps using one set of credentials, they are not the same thing.

The main difference between SSO and federated identity is their range of access.  

Think of SSO like having a driver's license: Within your own country, it serves not only as proof that you can drive but also as a handy form of ID within your country for various services. Your driver's license gets you recognized in many scenarios without needing additional ID. The secure token generated during the SSO process acts like your digital proof of identity, similar to showing your driver's license.

Federated identity expands on this by letting your digital identity be valid across different 'countries' or organizations, similar to how a passport works across borders, enabling access without the need for multiple identities.

Federated identity vs social login

Social login is a subset of federated identity.

Social login refers to a method of authentication where a user logs into a website or app using their credentials from a social media platform like Facebook, Google, Twitter, or LinkedIn. Federated identity is broader since the identity provider doesn’t necessarily have to be a social media provider. It can include social media, enterprise solutions, and other external authentication systems.

Another difference is that social logins use OAuth 2.0 and OIDC exclusively. Federated identity might use either of these two or SAML.

Conclusion

Federated identity systems have become essential in today’s digital world. They provide a seamless, secure, and efficient way for users to access multiple services with a single set of credentials. They enhance the user experience, improve security, and reduce organizational overhead. With proper setup, federated identity can be a powerful addition to any modern identity management stack.