Generative AI is a type of unsupervised machine learning that enables computers to generate new text, images, audio, and code. It works by training models like variational autoencoders to encode data into low-dimensional representations, learn the structure and relationships, then generate new outputs. Other models include generative adversarial networks. Generative modeling tries to understand data structures to generate matching features, unlike discriminative modeling which classifies data. The Turing test determines if a machine can converse without detection, demonstrating human-level intelligence. Generative AI has applications in finance like conversational banking, personalized advice, and compliance systems, as well as voice, music, and image generation.