# Towards the Next Frontier of LLMs, Training on Private Data: A Cross-Domain Benchmark for Federated Fine-Tuning

arXiv: https://arxiv.org/abs/2605.13936 · HTML: https://mlsanity.com/paper/2605.13936/

## Key facts

- No citing papers in the map yet (data through 14 Oct 2026).
- Builds on 21 of its 32 references that are in the map.
- First posted on arXiv 13 May 2026.

## Builds on (most cited first, 21 of 21)

- [Training language models to follow instructions with human feedback](https://mlsanity.com/paper/2203.02155/) (2022)
- [The Llama 3 Herd of Models](https://mlsanity.com/paper/2407.21783/) (2024)
- [Communication-Efficient Learning of Deep Networks from Decentralized Data](https://mlsanity.com/paper/1602.05629/) (2016)
- [QLoRA: Efficient Finetuning of Quantized LLMs](https://mlsanity.com/paper/2305.14314/) (2023)
- [What Disease does this Patient Have? A Large-scale Open Domain Question Answering Dataset from Medical Exams](https://mlsanity.com/paper/2009.13081/) (2020)
- [Few-Shot Parameter-Efficient Fine-Tuning is Better and Cheaper than In-Context Learning](https://mlsanity.com/paper/2205.05638/) (2022)
- [Parameter-Efficient Fine-Tuning for Large Models: A Comprehensive Survey](https://mlsanity.com/paper/2403.14608/) (2024)
- [Federated Learning on Non-IID Data Silos: An Experimental Study](https://mlsanity.com/paper/2102.02079/) (2021)
- [Federated Learning Based on Dynamic Regularization](https://mlsanity.com/paper/2111.04263/) (2021)
- [MedMCQA : A Large-scale Multi-Subject Multi-Choice Dataset for Medical domain Question Answering](https://mlsanity.com/paper/2203.14371/) (2022)
- [Good Debt or Bad Debt: Detecting Semantic Orientations in Economic Texts](https://mlsanity.com/paper/1307.5336/) (2013)
- [Med42 -- Evaluating Fine-Tuning Strategies for Medical LLMs: Full-Parameter vs. Parameter-Efficient Approaches](https://mlsanity.com/paper/2404.14779/) (2024)
- [Scaling Federated Learning for Fine-tuning of Large Language Models](https://mlsanity.com/paper/2102.00875/) (2021)
- [On the Impact of Fine-Tuning on Chain-of-Thought Reasoning](https://mlsanity.com/paper/2411.15382/) (2024)
- [FedLLM-Bench: Realistic Benchmarks for Federated Learning of Large Language Models](https://mlsanity.com/paper/2406.04845/) (2024)
- [Large Language Models in the Clinic: A Comprehensive Benchmark](https://mlsanity.com/paper/2405.00716/) (2024)
- [FlowerTune: A Cross-Domain Benchmark for Federated Fine-Tuning of Large Language Models](https://mlsanity.com/paper/2506.02961/) (2025)
- [Federated Fine-Tuning of LLMs: Framework Comparison and Research Directions](https://mlsanity.com/paper/2501.04436/) (2025)
- [FinLoRA: Finetuning Quantized Financial Large Language Models Using Low-Rank Adaptation](https://mlsanity.com/paper/2412.11378/) (2024)
- [LLMs Meet Finance: Fine-Tuning Foundation Models for the Open FinLLM Leaderboard](https://mlsanity.com/paper/2504.13125/) (2025)
- [Flow of Knowledge: Federated Fine-Tuning of LLMs in Healthcare under Non-IID Conditions](https://mlsanity.com/paper/2510.00543/) (2025)

## Abstract (arXiv)

The recent success of large language models (LLMs) has been largely driven by vast public datasets. However, the next frontier for LLM development lies beyond public data. Much of the world's most valuable information is private, especially in highly regulated sectors such as healthcare and finance, where data include patient histories or customer communications. Unlocking this data could represent a major leap forward, enabling LLMs with deeper domain expertise and stronger real-world utility. Yet, these data cannot be shared because they are distributed across institutions and constrained by privacy, regulatory, and organizational barriers. Moreover, institutional datasets are typically non-independent and identically distributed (non-IID), differing across sites in population characteristics, data modalities, documentation patterns, and task-specific label distributions. In this paper, we demonstrate a practical approach to unlocking private and distributed institutional data for LLM adaptation through federated collaboration across data silos. Built on the Sherpa.ai Federated Learning platform, our framework enables nodes to jointly fine-tune a shared LLM without exchanging private data. We evaluate this approach through a cross-domain benchmark in healthcare and finance, using four closed-ended question answering and classification datasets: MedQA, MedMCQA, FPB, and FiQA-SA. We compare three parameter-efficient fine-tuning (PEFT) strategies-LoRA, QLoRA, and IA3-across pretrained backbones under non-IID settings reflecting institutional data heterogeneity. Our results show that federated fine-tuning performs close to centralized training and outperforms isolated single-institution learning. From a Green AI perspective, QLoRA and IA3 improve efficiency with limited accuracy degradation, supporting federated PEFT as a viable approach for adapting LLMs where data cannot be shared.