Categorisation is based on what the spend was for, not what type of transaction it is.
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For example a direct debit for insurance is categorised as insurance and a Direct Debit for Netflix is classified as entertainment.

This is to make it clear that while a lot of Direct Debit transactions could be grouped under needs, for example insurance and utility bills, many others would be best classified under other categories such as entertainment for the Netflix example above.
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After consulting with users of NestEgg’s Open Banking service, we’re introduced a number of changes that make affordability assessment even quicker.

Direct Debits and Standing Orders are no longer a category for transactions. Transactions will be based on what they are for (e.g. Entertainment), not what they are (e.g. Direct Debit).

For example some Black Horse transactions that were categorised as Direct Debits are now categorised as a Credit Commitment (because this is car finance from Lloyds Bank). A Direct Debit transaction to the AA are now categorised as Insurance.

This enhances the accuracy when calculating an applicant's Needs, Wants and Commitments.

Additionally, Direct Debits and Standing Orders are classified as either Positive, Negative or Neutral in the spending analysis depending on their category (for example High Cost Credit).

Transfers became a new factor entirely, grouped into their own Transfers factor. From here, you can see at a glance the net transfer amount as well as the average transfers in and out.

This approach makes it clearer when applicants are financially dependent on others and where transfers in, exceed transfers out.

NestEgg has created a new category under Commitments for Credit Union transactions. As a result, Loans Officers can easily see what the applicant already pays to you, or another Credit Union.

Alongside the doughnuts for Income, Needs, Wants and Commitments there is "Transfers". At a glance, a Loans Officer can identify if there’s a net negative or positive transfer of funds. Consequently, it’s easier to focus an affordability assessment.

There is a dedicated tab for Transfers (as there is for Income and Spend). This allows you to review the transfers in one place.

To make it easier to navigate detailed transactions, we updated the transactions tables to include a column for “type of transaction”. Loan Officers will be able to see if a transaction was a transfer, standing order, direct debit, card payment etc.

New categorisation will lead to more accurate assessment of transactions, providing improved accuracy when assessing an applicant’s income and spending on Wants, Needs and Commitments.

Initially, we expect an increase in unclassified transactions due to the redistribution of Direct Debits and Standing Orders. We’ll be spending a significant amount of time categorising over the next week. Importantly, this provides an opportunity for NestEgg to finalise testing of a new feature - Open Banking Self Categorisation. Once these initial changes have bedded in, we’ll release this new feature which enables Loan Officers to categorise transactions themselves.

These changes lay the groundwork for the introduction of new Open Banking rules. We’ll share more details about this soon.