What is Generative AI? Explain how Large Language Models (LLMs) work and discuss their applications and challenges.

What is Generative AI? Explain how Large Language Models (LLMs) work and discuss their applications and challenges.

From the Combined Bank Assistant Programmer (CSE) October 2026 – Written (BIBM) exam, question 5 of 21.

Answers (1)

Generative AI is AI that creates new content — text, images, code, audio, video — by learning the patterns of its training data, rather than only classifying or predicting a label. Examples: ChatGPT and Claude (text), DALL·E and Midjourney (images).

How LLMs work

  1. Tokenization: text is split into tokens (word pieces) and each becomes a numeric vector (embedding).
  2. Transformer architecture: layers of self-attention let every token weigh its relevance to every other token, capturing context and long-range meaning; positional encoding keeps word order.
  3. Pre-training: on huge text corpora the model learns to predict the next token, which teaches grammar, facts and reasoning patterns. Billions of parameters are adjusted by gradient descent.
  4. Fine-tuning and alignment: instruction tuning and RLHF (reinforcement learning from human feedback) make it helpful and safe.
  5. Generation (inference): given a prompt, it predicts a probability distribution for the next token, samples one, appends it and repeats.

Applications: chat assistants, content and report writing, code generation, translation, summarization, customer service, document analysis, education and tutoring.

Challenges

  • Hallucination: confident but false answers.
  • Bias inherited from training data.
  • Privacy and security: leakage of sensitive data, prompt injection.
  • Cost: heavy compute and energy for training and serving.
  • Copyright, misuse (deepfakes, misinformation), and limited explainability.

— rhs

More from this paper