A federated identity is a single user identity that can be used to access a group of web sites bound by the ties of federation. Without federated identity, users are forced to manage different credentials for every site they use. This collection of IDs and passwords becomes difficult to manage and control over time, offering inroads for identity theft.
Federated identity management builds on a trust relationship established between an organization and a person. A federated identity makes it possible for the consumer to use this same trust relationship to access information with another, related company without establishing new credentials.
Standards organizations and others are developing architectures and tools to encourage federated identity. Microsoft’s .NET Passport program and the open standards under development in the Liberty Alliance are two examples of approaches to make identity management simpler and more secure.