Deep dive into spending with Expense Check categorisation

5 min read|Published May 09, 2023
Deep dive into spending with Expense Check categorisation

Understanding a customer’s expenses is essential to lenders when evaluating loan applications. Up-to-date customer information enables lenders to gain the most accurate view possible for their risk decisioning. That’s where Tink Expense Check comes in. Explore this product’s latest version with improved expense categorisation and other smart tools for lenders.

TL;DR – Quick summary
  • Tink Expense Check helps banks and lenders seamlessly verify a customer's affordability in minutes, at the time of application.

  • Deep dive into the latest version of this product, which has introduced new expense categories and other smart lending tools. 

  • Lenders can improve risk decisioning as well as applicant experiences thanks to Expense Check’s real-time data.

TL;DR – Quick summary
  • Tink Expense Check helps banks and lenders seamlessly verify a customer's affordability in minutes, at the time of application.

  • Deep dive into the latest version of this product, which has introduced new expense categories and other smart lending tools. 

  • Lenders can improve risk decisioning as well as applicant experiences thanks to Expense Check’s real-time data.

Supporting the Tink Risk Decisioning suite, Expense Check lets banks and lenders seamlessly verify a customer's affordability in a matter of minutes – at the point of application. It segments the applicant’s expenses into various categories to help give lenders an up-to-date and verified view of fixed and discretionary spending.

Expense Check enables regular affordability reviews, helping lenders meet their regulatory requirements. It gives lenders the ability to gain clearer real-time insights into an applicant's affordability including categories such as housing costs, loan payments, insurance, utilities and transportation. 

Expense Check works by looking at a number of different ‘categories for each transaction in order to determine which category the expense fits into. Expense Check looks at date, frequency, size, stability, transaction description and active expense streams before determining which category the expense falls under. Once the transaction is filtered using the criteria, Tink’s tech then sorts the transaction into one of 14 categories which includes the likes of loan payments, insurance, utilities, transportation and other categories.

With the help of pattern recognition, outgoing transactions from a user’s bank account can be grouped and filtered by recurrence and other criteria to extract only the ones that constitute active spendings. Each stream is classified into categories that help the lender decide whether or not the applicant will struggle to pay off the loan until the end of maturity.

Currently, alternatives to Expense Check include credit checks – which tend not to be up to date or in real time. Other alternatives require the customer to showcase their spending which can put the lender at risk of receiving fraudulent information. 

Since launching, we’ve been working closely with our customers. This means that their feedback goes straight into implementation to make this product best of use.

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Categories

Categorisation is key to this product update with new categories – and it’s based on feedback from Tink customers. Firstly, Healthcare, which includes pharmaceutical costs as well as medical consultation costs (public and private), such as the dentist or opticians. This category also includes prescriptions and any pharmacy purchases. 

The second category added in the new update is Childcare which includes daycare expenses, alimony and education. This includes nursery and daycare costs in the UK, private education costs for children up to the age of 18.

Thirdly, Collections has been added as a new category, which includes both public and private debt collectors. Public debt includes debt to the council or municipality. 

In addition, Taxes have been added, including property taxes, wealth taxes and any government administered taxes such as congestion tax charges, council tax and income tax.

Finally, our Housing category now includes mortgage, housing association costs and home cleaning services in the categorisation. Cleaning services covers household cleaning and other costs such as exterminator costs. 

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Tools

All new tools have arrived with the Expense Check update. The Irregular tool captures similar expenses that happen irregularly such as grocery shopping and clothes shopping. Although customers tend to regularly buy groceries, the time and the amount is not equal each time, which categorises the expense as ‘irregular’. Regular spending would constitute an expense that is paid out at the same time – and for the same amount – such as a Netflix subscription charge. 

Summaries by month means that Expense Check is now able to display a quick analysis of an applicant’s expenses across various categories for either three months, six months or 12 months.

Tink’s Expense Check solution provides the seamless experience you need to ensure easier lending for every applicant. Here's how to use open banking to help make your lending more accurate.


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