Kuala Lumpur, 30 September, 2020 – INCEIF and Refinitiv are proud to introduce the first edition of the Islamic Finance Knowledge Outlook report 2020. This report comes at a critical time to highlight the rapid development of the Islamic finance education sector.
Islamic finance education is the foundation of the spectacular growth of Islamic finance as it has become today’s trillion-dollar global industry. Refinitiv, in partnership with the Islamic Corporation For The Development of The Private Sector (ICD), has played a role in highlighting the importance of education to the Islamic finance sector by creating an independent indicator to measure the overall size and growth of Islamic finance knowledge globally. The ICD – Refinitiv Islamic finance knowledge indicator has identified that there are 968 education providers offering Islamic finance education at degree, course, and professional qualification levels.
Southeast Asia, specifically Malaysia and Indonesia, have been at the forefront of education in Islamic finance, being home to a respective 62 and 355 education providers. Elsewhere, the UK, with 72 providers, has demonstrated that it aims to remain as the prime European hub for Islamic finance.
Malaysia has the most developed Islamic finance ecosystem in the world and is a leading centre for Islamic finance education. The modernisation of Islamic finance practices has brought many positive developments, but the rapid evolution and growth of the industry has made it increasingly vital to narrow the wide gap in talent supply. The State of the Global Islamic Economy Report 2018/19 acknowledged Malaysia as the leading country with the most developed and advanced Islamic economy ecosystem.
According to the ICD- Refinitiv Islamic Finance Development Indicator Report and the BNM Blueprint for 2011 – 2020, Malaysia will require an estimated 22,400 Islamic finance professionals to support the sector by this year. Pakistan is estimated to need 3,000 – 4000 professionals as the government pushes forward with plans to increase the market share of Islamic banking to 20 percent by the same timeframe.
It has become a national agenda for Malaysia to provide the skilled Islamic finance professionals and practitioners the industry needs. Several initiatives have been introduced, such as the establishment of the Financial Services Talent Council mandated to develop, attract and retain talent in the industry through engagement with Islamic financial institutions as well as education and training institutes. Under the Malaysian Education Blueprint 2015–2025 for Higher Education, Malaysia plans to become an international hub for education in Islamic banking and finance.
INCEIF has been engaged in a number of strategic initiatives to promote a high degree of tertiary education in Islamic finance outside of Malaysia through partnerships with institutions in different countries to develop exchange programmes at postgraduate level. Students are able to study for a semester between campuses to gain exposure to Islamic finance ecosystems in other countries, or vocational training programmes to teach Islamic finance courses overseas. One example is Istanbul Zaim University where selected students and lecturers from INCEIF get to spend a semester in Istanbul to study and teach respectively, while INCEIF welcomed students and lecturers from the Turkish university for similar arrangements.
In in his message in the report, INCEIF President and CEO Prof Dato’ Dr Azmi Omar said Malaysia’s experience in Islamic finance human capital development was rather unique and could be emulated by other countries.
The country is host to universities, research institutes, professional bodies, training companies, and accreditation agencies which are all working to support the human capital development of Islamic finance. Starting with the International Islamic University Malaysia offering an undergraduate Islamic economics programme in 1983, today there are many universities offering specialisations in Islamic finance, from bachelor’s degrees up to PhD level. Bank Negara Malaysia, the financial regulator, showed its strong commitment to Islamic finance by establishing INCEIF, a university designated to be a knowledge leader in Islamic finance. The central bank also established ISRA (International Shariah Research Academy for Islamic Finance), a dedicated research institute for Shariah in Islamic finance.
Apart from academic institutions, there are two professional bodies established for the Islamic finance industry in Malaysia and abroad. These are the Chartered Institute of Islamic Finance Professionals (CIIF), a professional body that sets professional standards for Islamic finance human capital development, and the Association of Shariah Advisors in Islamic Finance (ASAS), whose mandate is to enhance the qualification and professionalism of Shariah advisors, both locally and internationally. To ensure the quality of programmes, there is also the Finance Accreditation Agency, which accredits continuing education and professional development programmes for Malaysia’s financial services industry including Islamic finance.
“There seems to be a disconnection between the academic and practical approaches towards Islamic finance. What are the key challenges in addressing this divide, and how can education providers and Islamic financial institutions work together to bridge the gap? There will always be a gap between what is taught in university and what is required by the industry as universities have to fulfil multiple objectives. In addition, not all faculty members have the latest industrial experience to impart to their students,” Dato Azmi said.
The challenges in implementing Islamic finance in emerging and frontier markets are manifold. Education is a key component of any Islamic finance ecosystem and having the right programme to produce qualified human capital for the Islamic finance industry is a prerequisite for emerging and frontier markets. Regulators must understand Islamic finance before they are able to regulate; likewise Islamic finance practitioners must have the required competency to practice in the industry. Without strong support from the education sector, the Islamic finance industry will not go far and will remain on the periphery, Dato’ Azmi added.
In many instances, local education providers in emerging and frontier markets lack the know-how and capacity to support the growing Islamic finance industry. This is where international Islamic finance education providers such as INCEIF can assist such institutions. INCEIF, as the only Islamic finance university accredited by AACSB, has supported many universities in Malaysia and abroad in curriculum development, training of faculty members, development of double degree programmes, offering continuous education programmes through MOOCs (massive open online courses), and joint research programmes.
INCEIF has also shared its wide knowledge of Islamic finance industry best practices with industry practitioners and senior officials at Islamic financial institutions and regulatory bodies through joint training programmes with local education providers.
A webinar on `The Current State of Islamic Finance Education and the Way Forward’ was held to mark the launch of the report. Moderated by Bahrain-based Refinitiv Head of Islamic Finance MENA, Mustafa Adil, the panel discussion comprised panelists Dato’ Azmi in Kuala Lumpur and Durham University Business School Sharjah Chair of Islamic Law and Finance, Prof. Dr. Habib Ahmed, in UK.
To download the report, click www.inceif.org/outlookreport2020