Evolution of AI Chatbots in Banking Audits

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Explore the transformative impact of AI chatbots like OpenAI ChatGPT, Microsoft Copilot, and Google Gemini in revolutionizing how banking audits are conducted. Dive into the capabilities of GPT models, their advancements, and the nuances of using ChatGPT and Copilot for efficient audit processes. Get insights on leveraging AI and Excel for advanced auditing techniques.

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Bank Audit using AI & Excel by CA Saran Kumar U saran@chaireturn.com +91 702-234-5678

Topics Intro to ChatBot ChatGPT Copilot Gemini Prompt Engineering CA Saran Kumar U +91 702-234-5678 saran@chaireturn.com 2

Intro to ChatBot AI s remarkable abilities to answer complex questions, manipulate text, write code, create art, offer medical / legal advice, and more are revolutionizing how we work and address challenges. In this dynamic landscape, three prominent AI chatbots have emerged as leaders: OpenAI ChatGPT, Microsoft Copilot, and Google Gemini. CA Saran Kumar U +91 702-234-5678 saran@chaireturn.com 3

What is GPT GPT stands for Generative Pre-training Transformer. GPT is a deep learning model developed by OpenAI. GPT is trained on a massive amount of text data to generate human-like text. GPT is based on the transformer architecture, which was first introduced in the paper "Attention Is All You Need" by Google researchers in 2017. GPT-1 was released in 2018 and later GPT-2 and GPT-3 was also released. 1. 2. 3. 4. 5. CA Saran Kumar U +91 702-234-5678 saran@chaireturn.com 4

What is GPT GPT-3 is considered as one of the most advanced language model available today. GPT-3 is known for its ability to generate human-like text, perform language-based tasks such as translation and summarization, and even engage in conversations. GPT can be used in various areas such as natural language generation, natural language understanding, text completion, conversation models, language translation and many more. GPT is trained on a large corpus of text data and learn patterns and relationships in language, which allows it to generate coherent and fluent text. 6. 7. 8. 9. CA Saran Kumar U +91 702-234-5678 saran@chaireturn.com 5

ChatGPT Developed by OpenAI, ChatGPT boasts a simple interface, various features, and frequent updates. However, optimal responses require prompt engineering. Its growing popularity (nearly 2 billion users) has impacted speed and performance. Additionally, GPT-4 access requires payment. CA Saran Kumar U +91 702-234-5678 saran@chaireturn.com 6

Copilot Developed by Microsoft, Copilot leverages web data for up-to-date information. Its strengths include free GPT-4 access, audio/visual features, and multiple conversational styles (Creative, Balanced, Precise) for tailoring queries and response tone/detail. However, Copilot currently offers limited responses per conversation with occasional delays. CA Saran Kumar U +91 702-234-5678 saran@chaireturn.com 7

Gemini Created by Google, Gemini provides swift responses and accurate answers, with no restrictions on response number or conversation length (unlike Copilot s 30-reply limit and ChatGPT Plus s 40-message limit every three hours). It also integrates with other Google applications like YouTube, Maps, Flights, and Hotels. However, some advanced features require a monthly subscription for Gemini Advanced. CA Saran Kumar U +91 702-234-5678 saran@chaireturn.com 8

Prompt Engineering Asking the right question is important when using ChatGPT, as it helps ensure that the model generates a relevant and accurate response. The relevance of the question depends on the task at hand, and the specific application of ChatGPT. In general, it is important to provide the model with as much context as possible when asking a question. This can help the model to better understand the intent behind the question and generate a more appropriate response. For example, if you're asking ChatGPT to complete a sentence, providing the sentence with more context will help the model to understand the meaning of the sentence and to generate a coherent continuation. CA Saran Kumar U +91 702-234-5678 saran@chaireturn.com 9

What is ChatGPT ChatGPT is a variation of the GPT (Generative Pre-training Transformer) model that has been specifically designed for conversational tasks, such as chatbots and other dialog systems. It is based on the same transformer architecture as GPT, but it has been fine-tuned to perform well on conversational data. Like GPT, ChatGPT is trained on a large corpus of text data, but the training data used for ChatGPT is specifically selected to include dialogs and conversations. This allows the model to learn the patterns and nuances of natural language dialogue, which makes it well-suited for tasks such as question answering, text generation, and text completion in the context of a conversation. 1. 2. CA Saran Kumar U +91 702-234-5678 saran@chaireturn.com 10

Key Features of ChatGPT ChatGPT's ability to understand context in a conversation and generate appropriate responses, Handling multiple turns of conversation Language understanding and generation abilities Personalization and fine-tuning to a specific domain Handling multiple languages ChatGPT can be used in various areas such as chatbot development, virtual assistants, customer service, language translation, and many more. CA Saran Kumar U +91 702-234-5678 saran@chaireturn.com 11

Mindset of the Auditors Compile Material Next Year Attend Seminars Circle Sign Report Step into Bank CA Saran Kumar U +91 702-234-5678 saran@chaireturn.com 12

80:20 Approach CA Saran Kumar U +91 702-234-5678 saran@chaireturn.com 13

CBS Environment Application Server User/staff enters information into screens Database Server Structured Data Format Text to Column using Delimited (mostly Comma) Reporting Server Unstructured Data Format Text to Column using Fixed Width / Delimited CA Saran Kumar U +91 702-234-5678 saran@chaireturn.com 14

Core Banking Solution vs Bank Finacle B@ncs Flexicube Bank of Baroda Bank of India Indian Overseas Bank Punjab and Sind Bank Punjab National Bank UCO Bank Union Bank of India Bank of Maharashtra Central Bank of India Indian Bank State Bank of India Canara Bank CA Saran Kumar U +91 702-234-5678 saran@chaireturn.com 15

Objective of the Statutory Branch Audit The overall objective of the branch audit should be to have transaction testing and provide inputs to the Statutory central Auditors on adequacy of implementation of various policy and regulatory requirements, including efficacy of the system and assurance functions (risk management, compliance and internal audit) at branch level. CA Saran Kumar U +91 702-234-5678 saran@chaireturn.com 16

Strategy of LFAR for Branch Auditors The threshold fixed for different purposes for comments in the LFAR will decide that above the threshold, the transaction detailing needs to be seen and commented upon. However, below the threshold, the system and processes should be checked and commented upon. CA Saran Kumar U +91 702-234-5678 saran@chaireturn.com 17

Large Advances Calculation A) Balance as on 31.03.2023 Funded B) Balance as on 31.03.2023 Non-Funded C) Total Advances Funded (+) Non-Funded Lower of Below is Large Advance i) 10% of C ii) Rs. 10 Crore Refer Working File 1 CA Saran Kumar U +91 702-234-5678 saran@chaireturn.com 18

Quick Mortality in Accounts A) Sanctioned Date B) NPA Date C) B-A If the C is <365 then all those accounts to be mentioned in LFAR 5.b.ii CA Saran Kumar U +91 702-234-5678 saran@chaireturn.com 19

Interest Rate vs Accounts Use Pivot Table for Interest Get Maximum Interest for each Product Type or GL Get Minimum Interest for each Product Type of GL If the difference, is high then examine further In case of adverse, please report in LFAR 5.b.iii CA Saran Kumar U +91 702-234-5678 saran@chaireturn.com 20

Sanctioning Authority Insert a Column in the Loan Balance File Besides Sanctioned Amount User VLOOKUP() from the Master Data of Sanctioning Authority Vs Limit If the Difference is Higher, then check whether properly reported to Higher Authority Report all the cases in LFAR 5.c.i CA Saran Kumar U +91 702-234-5678 saran@chaireturn.com 21

Top 5 Standard Large Advances Step 1 Out of the Advances Data, filter the Standard Advances Step 2 Out of the Filtered data in step 1 above, Filter for Top 5 from Outstanding Balance Column Step 3 Copy the Filtered data from Step 2 and Paste into New Sheet as an annexure to 5 (e)(ix) CA Saran Kumar U +91 702-234-5678 saran@chaireturn.com 22

Analysis - Top 5 Standard Large Advances Documentation Verification Interest Verification Account Statement Analysis Diversion of Funds, if any Description of Statement Financial Statements Analysis CA Saran Kumar U +91 702-234-5678 saran@chaireturn.com 23

Other Stratification Customer ID vs Account ID Stratification of Advance Portfolio Stratification of Year-wise Advances Stratification of Irregularity Stratification of Arrear Condition CA Saran Kumar U +91 702-234-5678 saran@chaireturn.com 24