The world of credit scoring is experiencing a quiet revolution. On one side, the traditional approach based on financial statements. On the other, the Open Banking approach based on bank flows. Which one to choose?
The financial statement approach: strengths and weaknesses
Strengths
- Established regulatory framework understood by all - Comparability between companies thanks to accounting standards - Structural view of the company (assets, liabilities, equity)
Weaknesses
- Significant time lag (6 to 18 months) - Easily optimizable through accounting choices - Does not reflect daily operational reality
The Open Banking approach: strengths and weaknesses
Strengths
- Real-time or near-real-time data - Reflects the reality of cash flows - Difficult to manipulate
Weaknesses
- Requires consent from the evaluated company - Often limited history (12-24 months) - Only interpretable with sophisticated algorithms
Which approach for which use?
For short-term credit
Open Banking is ideal. Bank flows from the last 3 months are more relevant than last year's balance sheet for assessing the ability to repay a 30-day credit.
For medium-long term credit
Financial statements remain essential. Financial structure, equity, self-financing capacity are essential indicators for 2 to 5 year commitments.
For continuous monitoring
Open Banking is unbeatable. Detecting cash flow deterioration in real time allows anticipating problems before they become critical.
RocketFin's hybrid approach
We combine both approaches. Our score integrates accounting data for structural vision and banking data (when available) for operational vision.
The result: a more robust score that captures both underlying trends and immediate warning signals.
Conclusion
The Open Banking vs financial statements debate is a false debate. Both approaches are complementary. The best scoring systems are those that know how to intelligently combine these data sources.