Forecast to cross the $3 trillion mark by 2021, Islamic banking is one of the most dynamic segments of the global financial industry. Reports trace this growth trend back to the 1970s, when Islamic banking witnessed year-on-year expansion of 15%.
Islamic banking’s resilience over the years has undoubtedly caught the attention of global financial hubs, with the sector’s particularly unique performance during and after the global financial crisis perhaps its biggest boost.
Despite its ancient legacy and growing popularity, Islamic banking is still a relatively new concept in some financial corridors. It faces much of the same challenges as any industry that is still in its nascency. This ranges from the need for greater standardization in governance and operations and the lack of disruption and innovation, as well as the perception of it being a more expensive form of banking.
Most concerning, however, is the growing skills gap within the Islamic banking industry. A 2015 estimate by the Finance Accreditation Agency in Malaysia put the global shortage of Islamic finance talent at 56,000. In the UAE alone, there are approximately 8,000 Islamic finance experts needed, according to the Dubai Islamic Economy Development Centre.
A recent ICD-Thomson Reuters Islamic Finance report captures a rise in the number of institutions offering Islamic finance degrees from 141 in 2014 to 191 in 2016—signaling a clear spike in demand for such courses. The question then is, how do we work towards closing this gap?
When the IT revolution began in the US, companies that sought to be a part of the change flocked to talent hubs such as Boston. The biggest takeaway from this phenomenon is the need to seek out highly skilled graduates. Although, a second critical point here is the importance of creating an exhaustive supply of talent, preferably within reach in the same geographical bounds.
Currently, a few countries stand out as being top producers of Islamic banking talent. The UAE and the wider GCC region have much to gain by becoming a source of skilled Shari’a finance professionals. On one hand, the segment’s growth opens the large and fast-growing Arab youth population to a promising career opportunity. On the other, the region acquires the wherewithal to grow its status as a bastion for Islamic banking.
While the responsibility of developing this access to Islamic education lies with the government, educational institutions and the private sector, these efforts must go hand-in-hand with a firm and effective awareness campaign among potential talent.
For one, youngsters today should be able to understand the benefits of building their career in a segment that feeds into the Islamic economy, which according to the DIEDC registered a 14% growth rate between 2015 and 2016 just in Dubai. In addition, investments must be made to encourage Islamic banking entrepreneurship and innovation. Special subsidies or grants could be given to Islamic banking students or innovators.
Ultimately, as the UAE pursues its ambitions to become an Islamic banking hub, the defining factor in its success will be its ability to build skills and rein in talent.
Jamal Al Jassmi is GM at the Emirates Institute for Banking and Financial Studies.