Developing professionals in the Islamic banking industry globally has become vital as the industry is growing despite the COVID-19 pandemic. The Halal Times had published a news article about a similar topic recently. The following article discusses the importance of developing talent for the growing Islamic finance industry in Malaysia and beyond.
Observing the past year from the vantage point of 2021, we can agree that 2020 will go down in history for how the human race relentlessly navigated obstacles hurled by COVID-19. This pandemic pushed governments, economies, policies, and everything in between to the limit, testing the capacity and merit of all.
In Malaysia, just when we were foreseeing a return to normalcy, we were thrown yet another curveball of a sudden spike in COVID-19 cases, sending us back into varying Movement Control Orders. Amidst the ensuing uncertainty, Fitch Ratings, a credit rating agency, assures us that it is not all “gloom and doom”, that within the thin silver lining, some sectors will thrive – one of them being Islamic Banking.
According to Dr. Azura Othman, CEO of the Chartered Institute of Islamic Finance Professionals (CIIF), “The key to Islamic Banking’s resilience lies in the principle of Islamic Finance itself, which is the prohibition of interest, meaning that financing will be based on the real economy. At the core of all these is the principle of justice and equity which encompasses property rights, equitable distribution of wealth, risk-sharing, fulfillment of obligations, and the sanctity of contracts. Unlike the conventional financial system that focuses primarily on the economic and financial aspects of transactions with their material outcomes, the Islamic system places equal emphasis on the ethical, moral, social, and public interest dimensions, to enhance equity and fairness in commercial transactions.
This principle asserts that both the bank and its customers have their share of ethical and moral obligations in fulfilling the financing contracts in contrast to an interest-based lending approach where risks are substantially transferred to borrowers. The borrower’s contractual obligation to repay the principal together with the interest, which is compounded over a stipulated time frame, notwithstanding his economic situation, in effect disconnects the relationship between the financing and the project or purpose for which the funds are needed resulting in divergence between the financial and real economy. Islam encourages lenders to provide borrowers in genuine difficulty be given time to repay money owed”.
Empowered by this principle, Islamic banks have long practiced foresight in looking into vast areas of risk, ensuring that their contingency plans during an unforeseen situation, like COVID-19, will be effective. The analysis as reported by Fitch Ratings further concurs Islamic Banking’s preparedness to maneuver the economic crisis caused by the COVID-19 pandemic with results to show. Owing to the flexibility Islamic Banking possesses, this financial industry has not only survived but also thrived during the pandemic.
According to Pew Research center, the number of Muslims around the world is growing twice as fast as the rest of the population. By 2060, there could be as many as 3 billion Muslims on Earth – a 70% increase from 2015. Whether if they live in Asia, Europe, Middle East, or Africa, the next generation of Muslims will have at least two things in common: youth and technology. The future growth of sharia-compliant institutions will therefore greatly depend on the opportunity, their ability to gain knowledge; and master technology and innovation. Further, there are various efforts to develop an international regulatory framework governing Islamic finance. Malaysia, Indonesia, Qatar, and Kuwait have all taken significant steps to centralize and simplify their sharia compliance.
The challenge is putting Islamic finance conceptual values into action, the constraints, and the state of readiness of Islamic bankers. “At CIIF, we saw the opportunity in the current environment for accelerating and unlocking the long-term potential of the industry and; the prospect of Malaysia to supply talents. Islamic Banking is distinguished by several key success pillars, namely, high industry standards, cutting-edge knowledge, paramount levels of integrity, and excellent quality services. Upholding these pillars when performing Islamic Banking services is critical for every personnel.
Therein comes the need to provide these talents with the necessary resources and accreditation to develop future leaders of Islamic Banking. This can be done through the various programs provided by the CIIF, which aims to strengthen the credibility and improves the professional qualification of industry players such as leaders in the financial services industry and employees of financial institutions in Islamic Finance. In short, we are preparing talents for the needs and wants of the future”, said Dr. Azura.