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25 December 2016
In the fast-growing industry of Islamic finance, the lack of specialized, trained human capital in the field continued to be a challenge, said Saudi Arabian Monetary Authority (SAMA) Gov. Ahmed Al-Kholifey.
In the fast-growing industry of Islamic finance, the lack of specialized, trained human capital in the field continued to be a challenge, said Saudi Arabian Monetary Authority (SAMA) Gov. Ahmed Al-Kholifey.
The industry is booming in member states of the Gulf Cooperation Council (GCC) and internationally, in Muslim and non-Muslim countries alike.
This growth suggested that Shariah-compliant banking had more to offer than simply being a way to serve the needs of the 1.5 billion Muslims around the globe, according to Al-Kholifey.
This situates education and training in Islamic finance among the top priorities to keep up with developments in the industry and guarantee steady growth.
“The fast-growing Islamic banking industry requires qualified and well-trained people in many disciplines and at various levels,” said Al-Kholifey at the World Islamic Banking Conference (WIBC) in Bahrain earlier this month.
“We urgently need to focus on that. More efforts need to be coordinated among regulators and banks in order to specify the areas where there is scarcity of human capital.”
Being home to the largest Islamic banking market in terms of assets, representing 34 percent, Saudi Arabia can further strengthen its position when it comes to offering specialized training in Islamic finance.
Al-Kholifey added that SAMA ensured an operating environment that supports Shariah-compliant products.
“We have ensured the availability of specialized training of bank staff as well as our own staff in Islamic banking,” he said.
The expected growth in the Islamic finance customer base will reach 250 million in 2020. This necessitates bridging the gap between what the industry demands and human capital by providing proper education and training.
“Saudi Arabia can enhance and deepen its position in the Islamic finance world and become a global center of excellence,” John Sfakianakis, director of economic research in Islamic finance at the Riyadh-based Gulf Research Center, told Arab News. “Deepening training and human capital is essential toward that goal.”
Talat Hafiz, secretary-general of Saudi banks’ Media and Banking Awareness Committee, told Arab News that among the factors behind the lack of specialized education in Islamic finance is that it requires in-depth knowledge of both conventional banking and jurisprudence of transactions.
“Finding professionals who can combine knowledge and understanding of both banking and jurisprudence of transactions is very difficult,” he said.
The Bahraini experience
Bringing conventional banking and Islamic finance training together has already shown improvement, according to some institutes that offer training and education to those interested in Islamic finance.
The interest is not limited to those who come from a Muslim background. It includes those from countries that have included Islamic finance and banking in their economic development plans.
Bahrain is one of the main hubs in the region when it comes to Islamic finance education and training.
The Bahrain Institute of Banking and Finance (BIBF) is one of the not-for-profit organizations that offer training in Islamic finance in Manama.
The education is customized according to the needs of employees.
“Islamic banks hire people from conventional banks. They may be very capable in doing tasks they used to do in a conventional bank, but they lack the knowledge in Islamic banking,” said Ahmed A. Hameed Al-Shaikh, deputy director of the BIBF. “So there is no synergy between him and the team in the Islamic bank.”
The assessment center at the institute conducts training-needs analysis to evaluate the knowledge level of clients, assess the outcome they are expecting and accordingly come up with a teaching proposal. This depends on the prior background of the applicants.
The institute receives students interested in the field from countries worldwide, and the interest is increasing.
“There is a spike in international students, especially in the GCC, but our plan is to grow it internationally beyond the GCC in the next year as a distance-learning program,” said Mujtaba Khalid, head of the Islamic Finance Center at the BIBF.
The goal is to create a base of human capital that caters to the Islamic finance industry locally, regionally and internationally.
“We want students to rise up to international standards so they can find jobs not only in Bahrain, but in the whole GCC as well,” said Al-Shaikh.
The Advanced Diploma in Islamic Finance (ADIF) at the BIBF started in 2000/2001. It was mainly for people who had no prior knowledge of Islamic finance.
“Now we get a mix of clients. A lot of young people are getting into the Islamic finance industry,” said Khalid.
“Initially, the model was to work at a conventional bank then shift into Islamic finance. Now we are seeing that even fresh graduates are coming into Islamic banking.”
The employment rate is 95 percent after graduation as there are many local graduates based in Bahrain, where demand is significantly high.
“We work with professionals in Islamic finance as well. We get high-level trainers, not only in-house staff,” said Khalid.
The BIBF provides staff training to major banks in the region, including Saudi Arabia. “We provide training to most of the top banks in Saudi Arabia, such as the National Commercial Bank (NCB) and Al-Bilad Bank,” Al-Shaikh said.
“They have trust in our quality, and we are a non-profit organization. This is where we gain trust. The revenue we get, we inject back to improve the quality of our education. Making revenue is not our main objective. Even after their employment, clients come back to do short courses or customized training as needed by the bank,” he added.
The BIBF falls under the supervision of the Central Bank of Bahrain (CBB) to ensure that the education and training the institute provides will graduate talents that can contribute to the advancement of the banking industry in Bahrain.
CBB Gov. Rasheed Mohammed Al-Maraj plays the role of the chairman of the board of directors.
The CBB requires employees pursuing a career in Islamic banking to hold an Islamic Diploma.
The ICD experience
The Islamic Corporation for the Development of the Private Sector (ICD), a multilateral development financial institution that is part of the Jeddah-based Islamic Development Bank (IDB), created the Islamic Finance Talent Development Program (IFTDP) in 2011.
The IFTDP is a training program designed to develop leadership within the Islamic finance industry. It serves students and trainees from the ICD’s 53 member states from the Muslim world.
“Getting into the IFTDP is very competitive,” said Sulaiman Ali Al-Sultan, acting director of corporate support at the ICD.
“When we first started the program, we received 500 applications. Last academic year we received 2,000, but we only accept 12 candidates per year. We want to make sure the people we select are the best for this program.”
The program not only trains individuals who aspire to a career in Islamic finance, but also focuses on identifying the skills needed to create leaders in Islamic finance institutions.
“We found from the first three batches of students that people are more in need of leadership skills, so we added this part when we designed the master’s degree in Islamic finance with IE Business School in Madrid,” said Senior Program Manager Samah Souri.
Khaled Al-Aboodi, CEO of the ICD, said: “Graduates have great opportunities to work in financial institutions, whether at the ICD or other financial institutions. We believe our program has the potential to lead Islamic finance institutions in the future.”
He added: “One of the reasons is that it lets participants take part in a wide range of projects across different countries. It offers on-the-job training and a master’s degree in Islamic finance leadership.”
The growth of Islamic finance has led to an increased demand for the ICD to provide a wide range of Shariah-compliant solutions to meet the various needs of customers and businesses in the global economy.
According to SAMA, the 12 local licensed banks operating in Saudi Arabia offer Shariah-compliant finance, as do several branches of foreign banks in the Kingdom. Introducing Islamic banking was a gradual process that started in the 1990s.
“Saudi Arabia was a pioneer in shifting gradually from conventional banking to Islamic banking,” said Hafiz.
“Some countries shifted overnight and the outcome was negative. We in Saudi Arabia started moving steadily since the 1990s. We succeeded in moving without negatively affecting customers’ dealings.”
John Sfakianakis, director of economic research in Islamic finance at the Riyadh-based Gulf Research Center, says Islamic finance is a mature and developed industry in Saudi Arabia, representing about two-thirds of total bank financing at the end of the first half of 2016.
Islamic banks accounted for about 43 percent of the sector during that period, up from 36.6 percent in the first half of 2015 and 42 percent at the end of 2015.
The Islamic windows of conventional banks were 24 percent, up from 18.6 percent in the first half of 2015, but remained unchanged from last year.
© Arab News 2016