How a fragmented Islamic Finance industry can begin to mend the cracks starting with its people

In an ideal world, unemployment would be but a distant worry. Every college graduate would get a job in the field of their choice upon leaving school, without having to worry about the value of their qualification or health of the job market.

However it is now 2015, and things are far from perfect. The financial markets are in a constant state of flux; still reeling from the aftershocks of the 2008 global financial crisis, and graduates are finding themselves in the doldrums of unemployment at any level of study - be it at an undergraduate or postgraduate level. This especially resonates strongly throughout the Islamic Finance industry, perhaps due to its relatively limited size; making up only 1% of the global financial markets.

The relatively small size of the industry can be perceived both as a blessing and a curse. On the one hand, job opportunities are scant particularly at the entry level; while on the other hand, the small circle of individuals who make up the industry have the opportunity to work together and make a significant impact to its growth and development. However, before delving into the numbers and technicalities of things such as the exponential growth of Shariah compliant assets and groundbreaking Sukuk issuances, the human element must first be considered. After all, it is the people who make up a business and contribute to the growth of an industry and economy.


A cold and lonely place for graduates

The numbers are staggering, with reports from reputable institutions such as KFH Research stating that the Islamic banking and finance industry as a whole will require up to 1 million graduates by the year 2020. Other institutions such as HSBC and the Chartered Institute for Management Accountants (CIMA) predict the need for 50,000 Islamic Finance professionals to fill the talent gap over the next few years. While these figures are encouraging, and to some extent paint a healthy picture of growth for the industry, it has been met with a great deal of scepticism across many quarters - including the Islamic Finance professionals themselves.

“HSBC and the Chartered Institute for Management Accountants (CIMA) predict the need for 50,000 Islamic Finance professionals to fill the talent gap over the next few years.”

According to the ICD Thomson Reuters Islamic Finance Development Indicator, there are currently 476 institutions worldwide offering training courses in Islamic Finance, and 115 academic institutions offering degrees in Islamic Finance. Out of this 115 institutions, the major jurisdictions offering such programmes are conned to the UK, Malaysia and some pockets within the Middle East.

Therefore, if, on average each university sees 100 new enrolments per intake, the number of Islamic Finance graduates since the inception of these courses should well full the talent gap that the industry is facing. Professional courses such as CIMA’s Islamic Finance certificate and the International Centre for Education in Islamic Finance (INCEIF)’s Masters in Islamic Finance Practice (MIFP) are also popular amongst entry level and mid-level professionals, with CIMA seeing an average of 1,000 new enrolments for its certificate course every year.

These numbers however belie the current state of talent development within the industry; and perhaps everyone involved in the industry - from regulators and financial institutions, to academic and educational institutions - have to take an introspective look at why unemployment is rife amongst fresh graduates.

Baiza Bain, the director of Amanie Holdings in Malaysia was exceptionally candid in expressing his views to the FAA: “What separates one graduate from the next is their level of understanding of what actually goes on in the market. I have personally interviewed many of the so-called Islamic Finance graduates, and they have failed to even live up to even the most basic level of understanding. Truth be told, their level of industry knowledge is severely lacking.

“Universities need to design their curriculum to meet the industry’s needs. Only then can they produce  graduates that can contribute from day one.”

Dr Abdel Aziz Mustafa, director of Corporate Support Development at the Islamic Corporation for the Development of the Private Sector (ICD) based in Saudi Arabia echoes Baiza’s sentiment, stating that the industry needs to focus more on the development of young professionals by encouraging engagement between the financial services sector and universities. “We don’t want to be faced with a situation where we get talent coming from universities that are not useful to the industry. Universities need to design their curriculum to meet the industry’s needs. Only then can they produce graduates that can contribute from day one. This will also give profile and marketability to the universities, and allow the industry to focus more on future growth rather than struggle to sustain the basics.”

Joy Abdullah, Head of Marketing & Communication at INCEIF, revealed: “Fresh graduates don’t have the capacity to hit the ground running. After the UK, the largest number of institutions providing Islamic Finance qualifications is in Malaysia, and although we have a plethora of institutions for the development of the Malaysian Islamic Finance industry, we are still seeing a lack of initiative in terms of getting talent into jobs. Sometimes it takes up to eight months for Islamic Finance graduates to obtain jobs, and not necessarily in their preferred field of practice.”


Industry Intervention

Dr Abdel Aziz believes that Islamic banks and financial institutions, as well as all industry stakeholders need to be driven by a greater cause, which centres on social responsibility.
“Banks are forgetting about their social responsibility, and they need to view the industry as a whole, especially since this is a growing industry. Stakeholders need to impart their know-how to new talent, and regulators, educational institutions and key players need to engage more with each other to develop this talent shortage and breach the gap quickly. Otherwise, it may hinder the focus and development of the industry.”

Baiza also feels strongly about the increased participation of industry players in developing a comprehensive curriculum for universities, to provide practical and applicable knowledge to undergraduates. “The industry itself needs to come out and specify what they need in terms of talent, because right now, universities (with the exception of a few) and third party course developers are just taking a stab in the dark. This should be the very first consideration. What the students are learning from these courses are actually very detached from what is currently taking place in the industry. Which is why the curriculum has stayed the same for the last ten to 15 years and do not include the latest industry trends and developments.”

“Islamic Finance is a very specialised field, so you would need very specialised talent. Somebody with little to no industry knowledge would denitely struggle on the job for at least the few years,” he added.

So what exactly can industry players do to help address this potentially serious problem?


Islamic Finance Talent Development Roadmap

It has been suggested that industry stakeholders come up with a Talent Development Roadmap to address the current talent gap and human capital issues. Elaborating on this, Joy said: “Advisories, subject matter experts and financial institutions can help organisations execute roadmaps. For instance in Malaysia, you have a myriad of organisations under the Bank Negara umbrella, such as ICLIF, AIBIM, IBFIM, AIF, etc. They can get involved with industry players to come up with a career development plan for individual institutions based on their own business strategy. Academia and the industry can also collaborate to create a curriculum that is approved and recognised on a wider scale.”

“This is where the Finance Accreditation Agency (FAA) can come into play and provide accreditation for these courses which incorporate both technical competencies and soft skills such as management and leadership,”

“This is where the Finance Accreditation Agency (FAA) can come into play and provide accreditation for these courses which incorporate both technical competencies and soft skills such as management and leadership,” he added.

Baiza and Dr Abdel Aziz are also in agreement that accreditation could help significantly with the development of talent in the Islamic Finance industry. “Standard setting bodies like FAA can play a very big role in developing a standardised and uniform curriculum for the professional sector which will be accepted across the board. This will also help the industry achieve the standards of talent that they are looking for,” said Baiza.

“Accreditation will help and focus the need to bring stakeholders together and talk,” said Dr Abdel Aziz. “Every industry is actually developed by professionals and their professional network. For the Islamic Finance industry in particular, a professional qualification is perhaps more useful than an academic degree.”

They also suggested that all industry stakeholders; particularly banks, financial institutions and education providers conduct more extensive research in the area of human capital development, with a focus on fresh graduates. “HR divisions should also take charge and improve on learning and development,” added Dr Abdel Aziz. Reflecting on his own talent development offering; the ICD’s Islamic Finance Talent Development Programme (IFTDP) which is supported by the Islamic Development Bank, Dr Abdel Aziz revealed that the institution is now opening its doors to banks and financial institutions to partner with, in order to accommodate more candidates.

“At present, we receive thousands of applications per intake. For our most recent intake, we received 1,884 applications - all from the conventional banking industry, and selected only 16 out of those. The selection process is very rigorous, and involves an extensive interview with at least five ICD board members. Partnering with banks will enable us to accommodate more students,” he said.

Dr Abdel Aziz also believes that the archaic view of career development has to be redened. “Career development as we know it is no longer relevant today. It’s not just about promoting an individual to the next position. We need to expand it into the ability to contribute to society, enhance their knowledge and contribute to their area of expertise. If we accept that as the new definition of career development, it then becomes the responsibility of professional institutions to equip their employees with this ability.”


No time like the present

For such a niche industry like Islamic Finance, learning on the job is a prime requirement, as most practitioners learn through their exposure to Shariah compliant contracts and structures. Bishr Shiblaq, the head of legal firm Arendt & Medernach’s Dubai office conceded that most lawyers specialising in Islamic Finance learn on the job and attend courses on Islamic Finance on their own initiative. “As a lawyer for multiple jurisdictions, there are components that are more important than having a degree specialising in Shariah law. For example, being multi-lingual, having a postgraduate qualification and gaining a degree from both civil law and common law jurisdictions are probably higher up the list when hiring. There are lawyers working with us who would study Islamic Finance if they saw a Shariah component in the transaction,” he said.

“a practical and comprehensive curriculum reflecting the business realities and current state of the Islamic Finance industry has to be developed to produce job-ready graduates.”

With that in mind, a practical and comprehensive curriculum reflecting the business realities and current state of the Islamic Finance industry has to be developed to produce job-ready graduates.

There is an urgent need to address the issue of human capital and talent development to ensure the further growth of the industry, and to produce the right talent capable of coming up with new innovations in banking and product development. “The only key ingredient to this is the willingness to do things,” says Joy, and one cannot help but agree.


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