GROUP ASSGINMENT

ISLAMIC FINANCE MARKET AND INSTITUTION

PIS 2453

NAME MATRIC NUMBER

NUR AMIRAH BINTI FRADWAN 4182010501
NURUL NORAMIRAH BINTI MAT ZAIN 4182010801
NUR ATIQAH BNITI ROSLI 4201001011

LECTURER NAME: MADAM HANISSAH

NO. CONTENTS PAGES
1. 1.0 INTRODUCTION 2
2. 2.0 DISCUSSION ISSUE OF ISLAMIC 3-8
FINANCE

2.1 REASONS BEHIND THE

SHORTAGE OF HUMAN CAPITAL IN
ISLAMIC FINANCE INDUSTRY

2.2 POSSIBLE SOLUTIONS TO

ADDRESS THE ABOVE ISSUE

2.3 BEST SOLUTIONS TO THIS ISSUE-

FOR BOTH TALENT SUPPLY AND
DEMAND SUPPLY

3. 3.0 CONCLUSION 9
4. 4.0 REFERENCES 10

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 1.0 INTRODUCTION

Islamic finance currently represents one of the fastest growing sectors of the global financial

system. Islamic finance is booming across the world with an estimated 20 percent annual

growth involving more than USD2 trillion of funds. Critical to sustaining growth of the

global Islamic finance industry is the availability of a highly skilled and talented human

capital workforce that can drive the future developments and innovations of the industry. The

need for expertise in the Islamic financial markets which requires more innovative Shariah-

compliant financial solutions from the Islamic financial institutions to meet market needs. As

per industry estimates, the global Islamic finance industry is poised to require one million

proffessionals by 2020 in various job functions and roles to meet the human capital needs of

the Islamic financial institution. Quite often it is regarded that there is a shortage of experts in

the current financial industry workforce who understand the principles and depth of Islamic

financial markets and potentially drive the industry forward while maintaining its growth

momentum. Islamic finance requires experts who not only have comprehensive knowledge of

finance, but also technical knowledge on Shariah. Some of the critical job functions where

talent is needed in the sector include Shariah-compliant product developers and required to

fill in the above highlighted roles is unique as the individual must have a knowledge

combination of finance, economics and Shariah principles, while being dynamic, innovative

and creative enough to lead the industry forward.

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 2.0 DISCUSSION ISSUE OF ISLAMIC FINANCE

2.1 Evaluate the reasons behind the shortage of human capital in Islamic finance

industry

Shortage of trained employees

Islamic finance is not only the comprehensive understanding about the finance, economic,

law or account but also it requires a depth understanding in Shariah knowledge while apply it

in the industry. Some of the functions and roles needed in mastering these areas are product

restructuring, Shariah compliant analysts, audit, research, and risk management. Based on

Abou youssef et al. (2012), customers were generally disappointed with the knowledge,

experience, and efficiency of Islamic Bank staff. Many Islamic bank workers are trained in

conventional bank and have insufficient knowledge in Islamic banking, while the Shariah

scholars skilled in Islamic law and jurisprudence are lack of knowledge in banking. Both

groups are required for training (Tahir & Umar, 2008). The studies have showed that about

60% of Islamic finance specialists require further training and skills development.

Islamic finance education

Based on Dr. Humayon Dar, many of the university lecturer were trained in the conventional

finance. Thus, it effects their ability to develop students’ understanding of Islamic finance.

Some of the students seem to get confused with their own professor who does not appear to

be completely confident of Islamic banking and finance practice. He added that it is due to

the lack of experience from certain lecturer of Islamic finance. Other than that, Islamic

finance is filled with ancient Arabic words that may overwhelmed even the native speakers.

There are only few textbooks on the subject.

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Employment mismatch

According to Ghoul (2013), students of Islamic finance or Islamic law degrees from

universities in Muslim or Western countries are struggling from a mismatch between the

education they earned and the employers’ needs. The president and CEO of INCEIF, Daud

Abdullah mentioned about a few factors for the placement problems included the fact that not

all the graduates possess “the right standard” in terms of their education they have received

and simply they are not flexible within the type and place of work that they are willing to

accept (The Prospect Group , 2012).

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 2.2 Analyze the possible solutions to address the above issue

Possible Solution for Shortage of trained employees

Islamic finance has been making inroads into mainstream finance and as a result, a huge

demand has been created for experts in the field. Companies should consider a much more

open approach to talent management by facilitating long-term career development by

facilitating internal mobility and moves between suppliers, customers and even the

competitors. The industry requires more professionals and skilled talents who not only have

dual knowledge of both Shariah and finance, but also possess soft skills such as leadership

and effective communication. The 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.

The current shortage of trained and qualified manpower in the Islamic finance sector has led

to an eventual spiralling of wages, which in the long term does not benefit the industry.

Talent pinching among the banks have resulted in higher wages but little improvement in

productivity and efficiency. Most banks prefer to hire experienced staff who can hit the

ground immediately. The current shortage of qualified Islamic finance professionals is a

challenge that poses a serious threat to the growth and development of the industry.

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If this issue is not addressed immediately, talent shortage may be an impediment to growth.

The talent market has changed significantly and now demands new approaches and focus,

and growth means good talent becomes increasingly hard to find. Hence, getting the right

people in the right roles is central, so pinching has become common place to meet those ends.

Possible Solution for Islamic finance education in Islamic Finance

Islamic Finance naturally has the potential to take the lead and strive towards an ethical,

moral and also sustainable model for finance. We need for education to play a role in

supporting the growth of Islamic finance is more urgent now than ever. Islamic moral

economy, being the bedrock of Islamic finance, should rightfully contribute to socio-

economic growth through human-centred and sustainable development.

The talent shortage in Islamic finance is undeniable, but the industry can be its own worst

enemy and barriers to graduate employment exist on both sides of the coin. Students need to

be more proactive in developing themselves into the type of employees the industry needs.

We have more support is needed, not only from the industry, but also from all stakeholders,

particularly institutions that provide education and conduct research. High-quality education

is a prerequisite to ensure continuous growth and development in Islamic Finance industry to

enhance Islamic social finance literacy in the industry the establishment of the Malaysian

Qualifications Agency (MQA) and the Finance Accreditation Agency (FAA) are examples of

accomplishments in developing academic and professional industry competency frameworks

for Islamic Finance expertise.

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Meanwhile, continuous academia industry engagements in research, training and consulting

through agencies such as the Association of Islamic Banking Institutions Malaysia, the

Securities Industry Development Corp and the Association of Shariah Advisors in Islamic

finance help propel the growth of Islamic finance expertise.

2.3 What is your best solutions to this issue – for both talent supply and demand supply

3. The necessary components of Islamic finance courses

 Core components:

 Shariah, Islamic economics, Islamic banking, Takaful, Islamic wealth management

and Islamic capital markets,

 Additional components:

 Soft skills. Ethics, leadership, entrepreneurship, teamwork and writing and

presentation skills

 Industry inputs:

 Practical exposure, case studies, study visits, access and exposure to CEOs and senior

management and key functions of financial institutions.

In developing human capital for Islamic finance, there must be strong linkages between

the educational programmes offered and the needs of the industry.

Solutions to developing human capital for talent supply and demand in the Islamic

banking industry

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 1. Internships / industry attachments

Internships form clear expectations from both academia and the industry and should

be made a requirement for all Islamic finance programmes.

1. Co-teaching

Co-teaching can bring those with the right experience (but not the qualifications) to

academia. Course can still be led by professional academics but industry practitioners

can be brought in to impart specific knowledge.

2. Industry-based academic projects

Programmes should be conducted with the industry in mind. For example, class

assignments should be based on current issues.

3. Professional association

A candidate for membership of a professional body should not only need to have

minimum academic qualifications but also minimum industry experience. This can

help reduce mismatches between the expectations of fresh graduates and the industry.

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 3.0 CONCLUSION

Going forward, demand for Islamic finance talent is set to grow in tandem with a rapidly

expanding industry. In the next few years, human capital needs will become more apparent

and critical as the Islamic finance evolves into a more competitive and sophisticated industry.

Nevertheless, the moderate economic growth outlook, amid evolving regulations and more

cross border business activity will create challenges in terms of acquiring and retaining the

right talent for IFIs. Encouragingly, courses and training provided by Islamic finance-specific

institutions have been well received by the industry. In addition, these institutions have

attracted parties from non-traditional Islamic finance jurisdictions both as collaborators and

student, a testament to the expanding geographical outreach of the industry. Another key

trend going forward is the increasing collaborations between education providers and IFIs,

which is a mutually beneficial arrangement for both parties. Overall, demand for Islamic

finance talent is expected to continue rising, while training providers continue to rise to meet

the challenges of supporting the unique needs of the Islamic finance industry.

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 4.0 REFERENCES

1. https://asianbankingandfinance.net

2. https://islamicmarkets.com

3. MIFC , (15 November 2013). Human capital development sustaining the growth of

Islamic Finance

4. http://islamicfinancenews.com/sites/default/files/newsletters/v9i43.pdf
5. https://asianbankingandfinance.net/islamic-banking/exclusive/islamic-banks-struggle-
talent-dearth-professionals-lack-full-competency-in
6. https://www.faa.org.my/article/issues-and-challenges-in-developing-human-
resources-in-islamic-finance
7. https://www.icife.org.my/using-education-to-support-islamic-finance-growth/

8. Abou-Youssef, M., Kortam, W., Abo Aish, E., & El-Bassiouny, N. (2012). An exploratory
investigation of the marketing practices conducted by Islamic banks in Egypt. African Journal
of Business and Economic Research (AJBER), 7 Nos 1 & 2 , 48-64.

9. Abu Dhabi Commercial Bank (ADCB). (2014). Global Islamic Finance Report (GIFR 2014).
Retrieved from Human Capital Development: http://www.gifr.net/gifr2014/ch_17.pdf

10. Dar, H. D. (2017, March 31). Islamic finance education in Malaysia. Retrieved from The
Malaysian Reserve: https://themalaysianreserve.com/2017/03/31/islamic-finance-
education-in-malaysia/

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