Islamic banks struggle with talent dearth as professionals lack full competency in Shariah

What talent development strategies could possibly work?

Bankers say the mismatch between talent supply and demand in the Islamic banking industry is characteristic of its nascency. Talent supply has struggled to keep up with the industry’s sudden growth in the past decade.

ABF: What are your thoughts on the issue of lack of human capital in the Islamic banking industry? What could be the reason behind this dilemma and what are possible solutions?

Mohamad Safri Shahul Hamid, Senior Managing Director and Deputy CEO, CIMB Islamic
Human capital development needs to be comprehensive and holistic in meeting the requirements for all levels. The horizon of talent development solutions has to be widened towards attracting, developing and retaining talents with required skills and expertise for the industry.

It must also meet the specific requirements of the workforce career progression, from the pre-employment stage, during employment and up to the leadership positions.

Talent development solutions may go beyond the circle of the financial services community, to include other business communities, such as legal fraternity, Government officials and IT solution providers. The advancement of the industry is also dependent on these parts of the private and public sector. Their training needs must also be met through structured training programmes to facilitate their understanding of the specifics of Islamic finance and its value propositions.

Malaysia is such one prime example in leading the ‘talent’ charge. This has culminated in a thriving Islamic finance environment, with numerous institutions catering to a wide range of industry needs.

These institutions, such as the International Centre for Education in Islamic Finance (INCEIF) and the International Shariah Research Academy for Islamic finance (ISRA) are gaining worldwide recognition in producing talent and research needs to support the growth of the vibrant industry.

In putting in place talent development strategies, the vision moving forward for human capital development in Islamic finance is to ensure a steady stream of competent and versatile talent to support greater innovation and dynamism of the Islamic finance industry.

This will require the approach to be comprehensive, meeting the highest standards and in close collaboration with the industry so that the learning solutions will continue to remain relevant.

Puan Fozia Amanullah, Chief Executive Officer of Alliance Islamic Bank Berhad
In my view, the mismatch between talent supply and the talent requirements of this high-growth sector of finance is actually characteristic of the industry’s nascency. Though modern Islamic banking had its genesis about 40 years ago, its growth only really accelerated in the past decade.

As the industry grew, the supply of talent for this industry struggled to keep up. While, the talent gaps in management have largely been filled with “converted” conventional bank professionals, it has been much harder to satisfy the demand for Shariah professionals and experts. This has of course driven up the cost of these Shariah talents.

At the same time, the industry has had to contend with Islamic banking professionals that lack depth in Shariah, and Shariah professionals who are not proficient in high finance – a compromised situation that has led to various intellectual confusions in the industry and certainly created a drag on the potential growth of this industry.

This cannot effectively be addressed by merely sending these professionals to one or two seminars to learn up on the subject matters they are unfamiliar with. On the other hand, to allow for education by osmosis or on-the-job training will mean a longer gestation towards mastery (with the inevitable trial-and-error costs that would need to be borne).

Thus the problem requires a more structured approach towards establishing a feeder education system for the industry. There needs to be greater collaboration between academia and industry to define the types of research and curricula that will produce the skills and expertise that the industry would need.

Professional associations for Islamic bankers and Shariah experts need to be established with a certification system to encourage continuous professional development in the industry. The human capital managers of Islamic banks would also need to define and enforce the specific technical competency requirements for Islamic bankers.

While the industry is still a long way away from reaching a comfortable equilibrium of talent supply and demand, efforts to this end are already afoot with the establishment of dedicated institutions such as the International Centre for Education in Islamic Finance (INCEIF) and various Islamic banking faculties of tertiary institutions.

It may take several more years, maybe even decades, before the situation is redressed. As such, the sustainable supply of banking practitioners with deep understanding of Shariah (i.e. a “complete” Islamic banker) should remain the ongoing focus of the regulators and industry players.