What does authorization in banking typically refer to?

Authorization in banking typically refers to the process by which a financial institution verifies that a transaction can be completed. This involves confirming that the account holder has sufficient funds or credit available to cover the transaction. It is a critical step in ensuring security and preventing fraud during transactions, whether they occur in-person or online. By granting permission for transactions, authorization helps to facilitate smooth operations within banking systems.

The other options are related to banking practices but do not directly pertain to the concept of authorization. Calculating interest rates involves determining how much interest will accrue on loans or savings accounts, whereas conducting financial audits refers to the examination of an organization’s financial records to ensure accuracy and compliance. Issuing new bank account statements involves providing account holders with updated summaries of their financial activity, which is a different function separate from giving authorization for transactions.