In one dictionary, identity is defined as ”a set of information by which one person is definitively distinguished”. This information begins with a document that corroborates a person's name: a birth certificate. Over time, additional information further designates aspects of identity:
An address
A telephone number
One or more diplomas
A driver’s license
A passport
Financial institution accounts
Medical records
Insurance statements
Employment records
Magazine subscriptions
Utility bills
Each of these individual documents represents data that defines a person's identity as it relates to the enterprise for which the identity was defined. The composite of this data constitutes an overall identity with each specific piece providing a distinguishing characteristic.
Because the Internet is becoming the primary vehicle for the types of interactions represented by this identity-defining information, people are now creating online identities specific to the businesses with which they interact. By defining a user identifier and password, an email address, personal preferences (such as style of music, or opt-in/opt-out marketing decisions) and other information more specific to the particular business (a bank account number or ship-to address), users distinguish themselves from others who use the enterprise’s services. This distinguishing information is referred to as a local identity because it is specific to the service provider for which it has been set.
Considering the number of service providers for which you can define a local identity, accessing each provider can be a time-consuming and frustrating experiencing. In addition, although most local identities are configured independently (and fragmented across the Internet), it might be useful to connect the information. For example, a user's local identity with a bank could be securely connected to the same user's local identity with a retailer. Federation addresses this issue.