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An identity provider is a system entity that creates, maintains, and manages identity information for principals and also provides authentication services to relying applications within a federation or distributed network.
Identity providers offer user authentication as a service. Relying party applications, such as web applications, outsource the user authentication step to a trusted identity provider. Such a relying party application is said to be federated, that is, it consumes federated identity.
An identity provider is “a trusted provider that lets you use single sign-on to access other websites.” SSO enhances usability by reducing password fatigue. It also provides better security by decreasing the potential attack surface.
Identity providers can facilitate connections between cloud computing resources and users, thus decreasing the need for users to re-authenticate when using mobile and roaming applications.