“Don’t you think the industry has put the cart before the horse? I mean we give the full attention to the means without putting a clear crystal vision, so we care about structuring, now don’t you think it’s time to shift to the visionary stage? How could we add value to the community? Don’t you think it is an issue? I want to put comparison between two institutions like one Dubai Islamic Bank that started in 1975 and the Grameen Bank which started in 1982. There was a clear vision (from Grameen Bank) which is poverty free world. Don’t you think we need to put a vision?”
A gentleman from the audience asked the panelists at the Global Islamic Economy Summit held in Dubai in November 2013.
Moderator David Vicary Abdullah, President and CEO of INCEIF remarked it as an excellent question and addressed Aamir A Rehman, Managing Director of Fajr Capital and Dr. Azmi Omar, Secretary General of IRTI from the panelists for commenting on it. Here is what Aamir A Rehman said:
“We need to recognize that the industry made a choice. And I understand and appreciate this choice that the industry made over the decades which is to choose market share, relevance and viability over some of the question around vision, and reach. What I mean by that is when the early pioneers of Islamic Finance wanted to show that Islamic Finance could be done, they set up as banks. That was a choice they made to seek banking licenses, to be regulated by central banks and to go down that path. I think the good news is the market share we achieved and you have seen all the statistics around that, that Islamic Finance have got market share. Where we have been less successful is on the aspects of vision, reach and authenticity and if you have seen the structures of many of our products as was implied in the previous sessions there are a lot of work to be done to make them more authentic and more differentiated from conventional finance. My own view of how this will move forward is that I don’t expect the major Islamic Banks to fundamentally shift their way of doing business, what I expect as you will see – Islamic crowdfunding platforms, you will see Islamic non-banking financial institutions, you will see Islamic microfinance institutions like you are referring to with grameen. And I think they will be engines of innovations. And I think the banks for a number of reasons are fairly constrained in how much they can differentiate from conventional which is a strategic choice that was made to make the industry larger and more sizable.”
The question was a very direct one and the answer was very clear and honest. This makes sense to me. There is no denial, or any attempt to sugarcoat with superficial phrases, but addressing the issue with honesty and with potential and practical solutions for the future keeping in context of the world we live in. I have been searching for an answer for so long like this from the key people active in the industry, and honestly I couldn’t find a better and comprehensive one than this from a public platform that is easy to understand and sounds convincible. More than that, the answer is directional, something that Islamic Finance industry needs badly.
I am not an expert in Islamic Finance. In fact, I have no interest in financial products or financial concepts. I do care for social and economic justice though and I derive that justice from the perspective of my faith. I care about those who are not cared about by the majority. What I bring with me is a passion for educational causes, sense of justice for social and economic causes, strange determination, a rebellious mind and perspective to see things with problem solution approach. I have been trying to make sense of it all in last five years. This is what I found out.
In an ideal world, Islamic Finance would probably look like this:
We are not living in the 1970s anymore. The realities, possibilities, demographics, consumer behaviors, platforms of communication, social, economic and political atmosphere, and perceptions everything has been evolving since then and we are now in 2015. The world out there is much uncertain, but uncertainty, as visionaries say is a good thing, because it brings possibilities and opportunities that certainty does not bring. The reason and purpose that gave rise to the idea of Islamic Finance did not change, but what changed over all these years is the understanding of the reality of both the conventional and Islamic Financial system. A lot of good has happened in favor of Islamic Finance over the last decade especially in last three years, no one can deny that. But where do we go from here?
I have engaged my thoughts in the area of developing future human capital through education and awareness of Islamic Finance. Awareness, education, and human capital all three are keys to define the direction of Islamic Finance industry. It is kind of puzzling to think about it because when the industry is in floating state, strategies for human capital is also floating and naturally being pulled from multiple directions. It is necessary to break away from such a vicious cycle. The idea of Yurizk Academy came in mind out of this necessity that I felt. Someone said these wise words – “When possibility meets necessity, big breakthroughs happen.”
At Yurizk Academy launch event I shared details about Yurizk Academy and how it addresses the issue of education, developing human capital for Islamic Economy and Islamic Finance, innovation and application of the knowledge. Watch the launch event recording here.
The two articles below (if you haven’t read these yet), one by Harris Irfan and the other by Usman Hayat complement the contents of this blog post.
Could Islamic Finance Save Capitalism? by Harris Irfan
Is the Islamic Finance industry a success or failure? by Usman Hayat