Federated Identity Login vs. Anonymous Federated Identity: What’s the Difference?

Identity management plays a critical role in cybersecurity. According to the 2023 Verizon Data Breach Investigations Report (DBIR), just over half of all reported breaches involved stolen or weak passwords, making compromised credentials the most common method used by threat actors to breach organisations. 

Effective identity management practices—such as multifactor authentication and access control—are essential for protecting sensitive information and preventing unauthorised access to systems and resources. Federated identity login and anonymous federated identity can both play a role in safeguarding organisations from costly security incidents and reputational damage, but it’s important to understand the difference between them as you work to secure your company.

What is Federated Identity Login?

Essentially, federated identity login is a system that enables users to access multiple online services or applications with a single set of credentials, such as a username and password. Instead of creating and managing separate accounts for each service, users can leverage their existing credentials from a trusted identity provider to authenticate across various platforms. 

If you’ve ever used your Google credentials to log into a separate app or platform such as YouTube or Twitter, you’ve experienced federated identity login. Here’s what’s happening behind the scenes:

• When a user attempts to access a service provider in a federated identity login authentication process, the provider redirects the user to their chosen identity provider (IdP) for authentication. 
• The IdP then verifies the user's identity using the provided credentials and issues a token confirming the user's authentication. 
• This token is then sent back to the provider, granting the user access to the requested service—without the need to share their login credentials directly with the provider.

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As noted above, federated identity login comes with a number of benefits, including:

• Stronger User Experience: Because users can access multiple services with a single set of credentials, they don’t need to create and manage separate accounts for each platform. This streamlines the login process and enhances the user experience.
• Reduced Password Fatigue: With federated identity login, users are less likely to experience password fatigue or forget their login credentials, leading to fewer password resets and support requests. Not only does this mean users can create stronger passwords in the first place, but it also saves time and resources for both users and service providers.
• Improved Security: Because federated identity login centralises authentication with trusted identity providers (IdPs), it reduces the risk of security breaches associated with maintaining multiple sets of credentials across different platforms and minimises the exposure of sensitive login information.

What is Anonymous Federated Identity?

Anonymous federated identity is also a system through which users can access multiple services without revealing their identities. However, in contrast with traditional federated identity login—where users authenticate themselves using personally identifiable information (PII) through a trusted IdP—users are assigned pseudonymous identifiers that allow them to interact with online platforms while preserving their privacy. 

A few notable characteristics of anonymous federated identity include:

• Pseudonymous Identifiers: Users are assigned unique identifiers not directly linked to their real identity. In this way, their anonymity is preserved while still allowing for authentication and interaction with online services.
• Trust Brokers: Trust brokers are entities that facilitate interactions between users and service providers by managing the exchange of pseudonymous identifiers and ensuring the integrity of the identity verification process (without compromising user privacy).
• Emphasis on Privacy: Anonymous federated identity offers enhanced privacy protection by minimising the collection and sharing of PII. This enables individuals to maintain stronger control over their digital identities while still allowing them to engage fully with various online platforms.

Anonymous federated identity’s focus on security reduces the likelihood of data breaches by minimizing the collection and storage of PII, thus limiting the potential impact of security incidents on user privacy. Furthermore, it provides individual users with greater flexibility and control over their digital identities, empowering them to manage their online presence and interactions according to their preferences and comfort levels.

Why Choose Anonymous Federated Identity?

In truth, having any type of federated identity management solution available to users is important, given the growing threat of cyber security attacks. However, anonymous federated identity offers greater privacy protection by allowing users to interact with online services without disclosing their true identities, compared to traditional federated identity login. When choosing between the two approaches, companies should consider:

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• Compliance with Privacy Regulations: A growing number of regulations seek to protect and enforce consumers’ privacy rights, including several industry-specific pieces of legislation in Australia. When selecting an identity management approach for logins, companies should ensure solutions like anonymous federated identity comply with relevant laws, such as GDPR, CCPA, APRA, and the Privacy Act.
• Security Implications: Although anonymous federated identity can offer stronger security protections than federated identity login, it’s still important that companies ensure their systems and solutions are set up in such a way as to minimise the potential for data breaches, identity theft, and unauthorised access to sensitive information.
• User Experience: You know your customers best. If they’re particularly sensitive to privacy and personal data security concerns, they may welcome options like anonymous federated identity that provide enhanced protection. That said, you’ll still need to ensure you partner with providers that balance greater security with user experience and convenience to prevent dissatisfaction with your implementation of anonymous federated identity solutions.

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Ultimately, opting for anonymous federated identity solutions like AdFixus’s patented identification method offers companies a strategic advantage by balancing security with privacy concerns. By providing users with seamless, frictionless experiences—while simultaneously safeguarding their sensitive information—anonymous federated identity solutions foster trust and confidence in the digital ecosystem. Not only does this enhance user satisfaction, but it may also strengthen companies’ competitive edge in today's data-conscious landscape.

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