Transaction categorisation is a process of identifying the context or purpose of a specific bank account record. The process implies using algorithms trained to recognise keywords, phrases or patterns in transaction details and assigning categories based on predefined rules.
Companies and researchers use transaction categorisation to simplify working with bank account information. Today increasingly more companies build digital applications that are powered by open banking APIs or user-submitted bank data (e.g. bank statements). The bank account data that these companies acquire is by default very raw and unstructured, which makes it hard to use in app development without dedicated data pre-processing. Transaction categorisation is the most common way to make data more developer-friendly, which simplifies building and launching open banking-powered apps.
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