Banking

Addressing The Insufficient Talent Pool For The Islamic Banking Industry

An outcry is going around recently, on the lack of practitioners to fulfil the demands created due the acceptance and expansion of Islamic finance (IF). According to AT Kearney, over 30,000 new Islamic banking jobs will need to be filled in the Gulf alone. In the United Arabs Emirate, companies will require more than 8,000 new employees that are trained in IF. A study published by Dzuljastri Abdul Razzaq, Head of the Finance Department at International Islamic University Malaysia in mid-2012, estimated that Malaysia will require 40,000 qualified practitioners by 2020 in order to match its growth. While in Indonesia, a survey published by its central bank in the late 2012 concluded that 17,000 additional practitioners will be needed by 2017.

Opportunities are abound then, for practitioners in various sectors of IF, ranging from Takaful, Asset Management, Auditing, Shari’a Compliance, Risk Management, and many others. While the market’s growth is accelerating, can the same be said of academic or professional training institutions to meet its demands? A quick online research shows there are many educational institutions for IF and options are aplenty, ranging from BA, or MA, or MSc degrees, to obtaining a professional certificate. Moreover, obtaining these qualifications is not only limited to countries with Muslim majority but in non—majority ones like the United Kingdom, France or Australia.

Why then, are there not enough talents to fill up the shortage? Some have said, although there are many academic and training institutions in IF, the producing ratio is not enough to meet its demands. Could this be therefore, the sole reason as to why there is a lack of insufficient practitioners in the field? If this was the case, the answer to the solution should be simple enough. Unfortunately, the situation is not as simple as it seems.

To set up more academic or training institutions will not necessarily solve the problem, but could create other unintended risk. It could lead to the problem of compromising the quality of programmes since there is already a shortage of qualified academicians, or practitioners to teach the subjects.

The problem lies with not only the lack of educational institutions to meet the ratio of demands. Instead, there are other factors involved. To solve the problem on the scarcity of talent in IF, besides academia, the government, financial service firms (FSF), and students each has a role to play.

GETTING INTO THE INDUSTRY

Attracted to the growth of the industry, many, from students to existing financial practitioners have signed up for classes in hope to join in its expanding workforce. In recent years however, some fresh graduates have lamented on not being able to get employment. This is due to their lack of experiences practicing IF and therefore, FSFs are unwilling to take them in, as it would require training on their part. Herein is the problem: on the one hand, we have eager graduates with the right knowledge singled out because they lack the necessary experiences; on the other hand, some firms could be contributing to the lack of talent pool due to their refusal to train these fresh young bloods.

The case for the latter’s refusal could be contributed to various factor. One, they genuinely do not have the capacity or capability to offer graduate training, which could pertain true to smaller FSFs. Two, their hiring policies are obsolete and need to undergo a revamp in order to adapt to the IF market.

An IF practitioner has argued that plenty of HR departments have no knowledge of recruiting talents for IF, and bigger FSFs are still not taking the potential of developing the talent for this market seriously. Third, FSFs often feel training graduates is time consuming and expensive, hence, they prefer to hunt for talents from their competitors.

Others have argued that some graduates often make the mistake of thinking there is a generic job in Islamic Finance. FSFs need specialists, therefore, it is not enough for graduates to have knowledge of IF; but they need to tailor it specifically, and acquire the necessary skills. Some have argued however, the problem lies with the failure of academic and training providers in providing curriculum that cater to the industry’s needs. There seems to be a disassociation between what the industry really needs, and with what institutions produced. Some cynics go to the extent of accusing the latter of seeing IF courses as another type of cash cow.

THE ROLES OF EACH

Although it seems easy to accuse academic or training institutions jumping into the bandwagon to cash in on quick money, such allegation is difficult to prove, and contributes nothing to solve the problem. If the IF industry is worried about the quality of practitioners being produced by these institutions that have appeared out of sudden, then there is a solution around it. Ensure academic institutions follow the generally accepted standards followed by IFIs.

Before any of you argue it is impossible to do so, since there is no global accreditation body to recognised and standardised IF practitioners, think again. It is true no such accreditation body exists, well not yet, but there is a generally accepted standard like the AAOIFI standards which is followed by many countries. Before issuing out license to set up, the government will have to ensure IF educational institutions follow this standard.

Most importantly however, both the academia and industry need to have frequent dialogue to ensure curriculums are actually meeting the needs of the market. If the lack of experiences hinders graduates from being employed, perhaps the solution is for academia to collaborate with FSFs to include practical training, or internship in their curriculum.

Some academic institutions have done so, but many others could follow their lead. Although one might say to do this would require big commitment from FSFs, but it is not without its rewards. Bigger FSFs might think it is easier and cost affective to leverage on their employees, and send them for a crash course in IF, or entice existing practitioners from rivals, but this view is short-sighted in the longer term.

Instead, they should get serious on investing human talent by hiring young graduates and training them to specialise in a certain division. Relying on their employees or enticing existing practitioners is a short term solution, and selfish on their part. What happens when the demands for IF services grow, or when the IF market diversifies and requires niche practitioners? As the IF industry is still young, it would require IFIs to put their selfishness aside and contribute to making it work. Moreover, the younger generations with their fresh knowledge, and untainted views to conventional ways of finance might be able to provide better, creative and new ideas on how to expand and strengthen the IF industry. The rewards of investing in new talents might not be instant but in the longer term, it is undeniably more rewarding to the company and the industry as a whole.

As FSFs sort out their roles in the solution, graduates should not take a backseat and be content with the view that their degrees or qualifications will necessarily land them a job. If specialisations are what most FSFs need, then if possible, pick and plan earlier on what kind of specialised sector of IF one wants to do.

Next, as advised by an expert IF practitioner, try to get as much experiences and knowledge beyond what is taught in the classroom. Go for internship (paid or unpaid) if there is any, attend conferences, keep up to date with the ongoing of the market, and in general just demonstrate as much interests of IF on your CV in order to give you the edge.

The other impediment to filling up the talent of pool of the IF industry is the preferential treatment of national talents, who might not have the necessary qualifications, over non-nationals who do. Preferences might exist due to a certain quotas for locals employers need to fulfil, or the high cost of obtaining working visa for non-nationals.

To tackle this problem, the government should play their part by making a leeway on policies of recruiting non-nationals, or creating a sort of Work Visa Specialist for IF practitioners.

Government could also contribute to deepening the talent pool by offering incentives for those involved in the IF industry, from practitioners, to academia, to employers. Malaysia is a good example in doing its part for talent development in IF.

The outcry of the dearth of talent in the IF industry is nothing new to be honest. The issue has been around since a few years back and yet, up to today, nothing much has been done by many to solve the problem. In fact, it will continue to become a bigger problem as IF expands and demands for its services grow.

As laid out in this article, there are problems in which those involved, whether it is academia, or government, or graduates, or FSFs need to tackle on their part. The solutions are not simple to execute and would require much effort, but at least, there are solutions. Most importantly, the insufficient talent pool in the IF industry can only be addressed if everyone work together

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