Open Banking and Proof of Income for Social Security Benefits

This page is a translation of the original Portuguese text, provided for convenience. It deals with Brazilian law. If there is any discrepancy, the Portuguese version prevails. Read the original in Portuguese

Open Banking could change how insured workers prove their income to the INSS (Brazil’s National Social Security Institute), making the process faster, more transparent, and less bureaucratic.

What Open Banking Is and How It Connects to Social Security Law

The open financial system, known as Open Banking, marks a structural change in how Brazilian citizens’ banking and financial data is shared among institutions. Regulated by the Central Bank of Brazil, the model lets the account holder authorize the sharing of his or her financial data with third parties, including government agencies. In the social security context, this innovation paves the way for proof of income, historically one of the biggest obstacles to obtaining benefits, to be handled digitally, securely, and almost instantly.

When we look at the current landscape of applications filed with the INSS, we see that a significant share of denials stems from problems proving earnings. Self-employed workers, individual microentrepreneurs, special insured persons, and professionals with variable income face enormous difficulty gathering the required documentation. Pay stubs do not always exist, bank statements may be incomplete, and income tax returns do not always reflect what a person actually earns each month. Open Banking emerges as a tool that can fill those gaps with real, verifiable data.

We have observed that the growing digitization of Brazilian public services has already created fertile ground for this kind of integration. The Meu INSS portal, the Gov.br platform, and the facial-biometrics proof-of-life system are examples of how technology is being built into the relationship between insured persons and the social security system. Bringing Open Banking into this ecosystem is, therefore, a natural and expected next step.

This topic is directly related to the tokenization of contributions, which we cover in a dedicated article.

This topic is directly related to digital platforms and gig workers, which we cover in a dedicated article.

How Open Banking Can Make Proving Income Easier

Proof of income is required in a variety of social security situations: when calculating the salário de benefício (the base amount used to compute a benefit), when reviewing welfare benefits such as the BPC/LOAS (Continuous Cash Benefit, which requires proof of economic vulnerability), when granting auxílio-reclusão (the benefit for dependents of an imprisoned insured person, which depends on the income of the imprisoned insured person), and even when reviewing benefits that have already been granted. In each of these scenarios, the insured person must show through documents what his or her financial situation really is. The process tends to be slow, prone to inconsistencies, and in many cases leads to denials that could have been avoided.

With Open Banking, insured persons could authorize the INSS to access their financial information directly from their banks. That would include transaction history, average balances, regular deposits, and patterns of financial activity. This approach would eliminate the need for insured persons to manually gather bank statements from multiple accounts, supplemental declarations, and other documents that are often requested in specific formats, forcing people to redo their work.

For informal and self-employed workers, the advantage is even greater. Consider a bricklayer who receives Pix payments from several clients throughout the month. Today, proving that income to the INSS takes considerable effort organizing paperwork. With data sharing through Open Banking, the flow of deposits into his own bank account would serve as strong evidence of his paid work and of his average earnings.

Integrating Open Banking with the social security system has the potential to turn banking data into reliable digital evidence, reducing denials caused by documentation failures.

Another relevant aspect involves updating registration records and proving that a beneficiary is alive. Regular activity in a bank account can indicate that the beneficiary is alive and active, supplementing (or in some cases even replacing) traditional proof-of-life methods. This possibility is already being discussed at the regulatory level, and it could reduce lines and unnecessary travel, especially for older adults and people with mobility limitations.

Legal Aspects and the Protection of the Insured Person’s Data

Any integration between Open Banking and the social security system must strictly comply with the LGPD (Brazil’s General Data Protection Law). Financial information can be shared only with the data subject’s express, informed, and revocable consent. This means insured persons must clearly understand which data will be shared, for what purpose, for how long, and with whom. This principle of transparency is essential to keep technological innovation from becoming a tool of improper financial surveillance.

The legal basis for processing this data in the social security context could rest on the data subject’s consent, on the government’s execution of public policies, or on both. Still, we believe consent is the better route, because it preserves the insured person’s autonomy and avoids disputes over compulsory use of sensitive financial data. Insured persons should always have the option to prove their income by traditional means if they prefer not to share their banking data electronically.

Cybersecurity is another concern. Financial data is classified as sensitive data in many jurisdictions, and although Brazil’s LGPD does not expressly categorize it that way, the prevailing view is that it deserves enhanced protection. As the agency receiving this information, the INSS would need to invest heavily in information security infrastructure to ensure that data shared through Open Banking is not vulnerable to leaks or unauthorized access.

Another point that deserves attention is the possibility of challenging, administratively and in court, data obtained through Open Banking. If the INSS uses shared financial information to deny a benefit (for example, by concluding that household income exceeds the BPC/LOAS limit), the insured person must be guaranteed the right to question how that data was interpreted, to provide additional context, and, if necessary, to appeal administratively or in court. Technology cannot create an absolute presumption against the insured person.

Practical Applications Across Different Social Security Benefits

For the BPC/LOAS, proof that per capita household income falls below a certain threshold is an essential requirement for receiving the benefit. Today, that verification involves filling out declarations, submitting documents for every member of the household, and often home visits by social workers. With Open Banking, it would be possible to verify each family member’s financial activity more precisely and quickly, provided that everyone authorizes the data sharing.

For auxílio-reclusão, which depends on proof that the imprisoned insured person had income within the established limit, access to financial history through Open Banking could replace documents that the inmate’s family members often struggle to obtain. This simplification could significantly speed up the granting of a benefit that typically has very long processing times.

For retirement benefits, especially for individual and voluntary contributors, Open Banking can help verify whether contributions were made regularly and identify periods in which the person worked for pay without the corresponding social security payments. This information is valuable both for retirement planning and for proceedings to recognize contribution time (averbação de tempo de contribuição).

We also note that, in benefit reviews and vocational rehabilitation proceedings, access to up-to-date financial data can give the INSS (and the insured person) a more complete picture of the person’s real economic situation, allowing fairer and better-grounded decisions. The transparency that comes with data sharing tends to benefit both sides and to reduce unnecessary litigation.

Challenges and Prospects for Implementation

Despite its transformative potential, integrating Open Banking with the social security system faces considerable challenges. The first is digital inclusion. A significant share of INSS insured persons, especially older adults and people in rural areas, have limited internet access and little familiarity with digital tools. Any implementation that relies exclusively on technology risks excluding the very people who most need social security benefits.

Interoperability among the systems of the Central Bank (which oversees Open Banking), the INSS, and Dataprev (the technology company that processes social security data) is another major technical challenge. Each of these entities operates with different infrastructure, protocols, and standards, and building interfaces that allow secure, efficient communication among them takes investment, planning, and time.

Public employees who review benefit claims will also need training. Interpreting financial data obtained through Open Banking requires specialized knowledge that goes beyond the traditional training of INSS analysts. Without adequate training, there is a risk that the data will be misread, leading to unfair denials or, conversely, to benefits granted improperly.

From a regulatory standpoint, there is still no specific legal framework governing the use of Open Banking for social security purposes. Building that framework will have to involve not only the Ministry of Social Security and the Central Bank, but also the ANPD (Brazil’s National Data Protection Authority), the Public Prosecutor’s Office, and organizations that represent insured persons. Dialogue among these players will be essential to ensure that technological innovation serves the public interest without compromising fundamental rights.

Finally, we believe implementation will need to be gradual, possibly starting with pilot projects for specific benefits and expanding as the results are evaluated. The experience of other countries that have already moved forward in integrating open financial systems with public services can serve as a reference, but the particularities of the Brazilian social security system (with its complex rules, transitional provisions, and different regimes) call for solutions tailored to the realities of this field.

As informações deste artigo são de caráter informativo e não substituem consulta jurídica individualizada. Cada caso possui particularidades que exigem análise específica.