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  • Writer's pictureWilliam Webster

Testing, one, two, three

After the release of GPT-4o earlier this week, I tried some of the standard tests I conducted on earlier models. The simple conclusion is that if you are not using AI, you will be left behind.

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These three tests used single-shot prompts, and the results are sufficient to acknowledge that AI, in many cases, can do what humans can. The difference lies in speed and breadth of knowledge. AI is now much faster, and its ability to cover a wide range of topics at a reasonable depth is unquestionable.


In the three examples below, the responses may not be as I would write them, but it is clear that the results are better than those I would have expected from someone with less than five years of experience in treasury. In other words, AI is your helpful junior assistant, willing and able to do things without questioning and with speed. This does not preclude a human in the loop. Indeed, this is highly recommended because AI can get things convincingly wrong. If you are lazy and take the output as given, you could be in for a nasty surprise.


As discussed in a previous post, the increase in productivity that can be achieved and the minimal cost incurred means that anyone asking to increase headcount in treasury must surely answer the question: have you tried AI before adding to the payroll? All Chief Executives, please note.


Now the examples.


Explaining a PowerPoint slide

I asked GPT-4 to explain a PowerPoint slide. The prompt is simple, and the response is acceptable. It does this easily, and whilst the narrative isn't quite as I would have put it, it is fast and effective. More


Writing for the board

In this example, I asked GPT-4o to explain a picture of a red-amber-green report for the board. I then asked it to provide a simple narrative and the action the board should consider. It does this with ease, and it is the direction in which board papers will go in the future. AI can repurpose content for the audience and remove the padding that seems to have accumulated over the past few years. Here's the summary, (GPT 4o won't generate a link for a picture-based prompt):


The current financial assessment reveals that credit exposures to Barclays and NatWest are within acceptable limits, though Lloyds exceeds its limit by £1m. Liquidity is generally strong, with high-quality assets exceeding limits and adequate coverage in stressed scenarios, although the "days no action" metric is below the limit by 10 days. Interest rate risk is mostly within limits except for the 1-3 years period, which is slightly above. Basis risk remains within acceptable bounds across all categories, and the investment portfolio shows significant under-utilization in the 0-1 year range, while the 2-5 years range is fully utilized.
Actions and Recommendations
To address these findings, it is recommended to reduce Lloyds' exposure by £1m to meet its limit. The liquidity buffer for "days no action" should be increased to achieve the required 150 days. The interest rate risk for the 1-3 years period needs adjustment to bring it within the £1m limit. Additionally, increasing investments in the 0-1 year portfolio will optimize returns and ensure better utilization of available funds. Monitoring and adjusting these areas will help maintain compliance and enhance financial performance.

Differentiating between banks and companies

In this test, I asked GPT-4o to explain how banks and companies hedge their interest rate risk. Could AI differentiate between banks essentially hedging their risk on a floating-floating basis, demonstrating that they are managing margins, with companies focusing on the cost of money and locking in an expense? The result covered more than I expected. I can't fault the AI; it does the job well, even if it's not as I would have written it. That's just something that I will have to get used to. More


Why this is important

It's simple: AI can perform many tasks in our specialist area quite adequately, and we should be using it in our day-to-day work. If we aren't, there is something wrong.


It is no use waiting for a magic bullet to arrive, giving you all the knowledge to integrate AI into your business. You will find that AI is not something you can suddenly switch on; it needs some development, learning, and experimentation.


Think of it as trying to run a 5-kilometre race. If you have not run before, you will struggle, but with some practice, the distance will become very manageable.


So my challenge to you; if you work in treasury and you're not using AI, unpack it and get going.

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