Is Islamic Finance Industry Suffering From Linear Thinking?

Sadia Karim Current Issues in Islamic Finance, Entrepreneurship, Human Resources in Islamic Finance, Islamic Banking, Islamic Economy, Islamic Finance 1 Comment

Creativity is just connecting things. When you ask creative people how they did something, they feel a little guilty because they didn’t really do it, they just saw something. It seemed obvious to them after a while.” Steve Jobs

In February 2014 at Dubai Government Summit, Dr Peter Diamandis, Co-Founder of Singularity University and Founder of X Prize, USA presented his insight on how the world would look like in 2050. He spoke about the massive disruptions in technological innovation which will shape the new reality. Watch full video below.

In 2015, Goldman Sachs published an interactive infographic on ‘Millenials’, one of the largest generation in history that is reaching its peak spending age. In the infographic, GS highlights the characteristics and differences in millennial’s consumption patterns from its earlier generations. Why does an institution like Goldman Sachs care about millennials so much, that they published such critical summary of this generation? Because that matters. Matters significantly. Not just for GS, but for the entire global economy.

GS summarized millennials as a generation with a different world and different worldview as they grew up with rapid change in their external environment. This led them to have a different set of priorities and expectations something that may seem alien to the previous generation. However, they are the ones who will be coming to the driving force of the economy and the world is currently going through a transitionary phase which seems quite chaotic due to this projected shift of balance.

In 2011, PewResearch Center published an in depth research study on “The Future of the Global Muslim Population” which has been cited widely since then. In that study they projected that if the trends continue, Muslims will make up 26.4% of the total projected population of the world in 2030 which is 2.2 billion in numbers.

We live in a world that is connected. Every industry is affected by what happens around the world. In order to make decisions, leaders are now appreciating the value of integrated reporting. Decisions and policies cannot be made in isolation anymore because we are not living in an isolated world.

When I look at Islamic Finance industry as an outside observer at this very point of time, it appears isolated. It seems like it has created a bubble within which there is a smaller segment of high net worth clients as compared to vast and wide mass consumer market. In the bubble there are accolades and feel good emotions as compared to focus on creation of trust and serving the middle class and below. Connecting the halal industries with Islamic Finance is probably the best thing that happened in the not so long history of modern Islamic Finance to bring the industry close to people’s daily lives. However there is a long way to go and by various observations, the big question is: “Is Islamic Finance and Islamic Economy prepared for the future?” Because when we connect all the above dots and reflect, it may not be a surprise that the millennial generation that is going to inherit the economy will not wait for someone to solve their problems. They will create their own solutions. When PayPal appeared, conventional banks were not prepared. They were not prepared for the likes of Grameen Bank, or the likes of Kickstarter, or Transfer Wise. None of these affected the conventional banking industry in a significant manner yet. However what the future holds is massive disruptions. Is Islamic Banking and Finance prepared for what may come?  What kind of minds the industry is creating to solve its future challenges? Begs an answer.

Now that your read this, continue the thought: “ What Brings Exponential Results for Islamic Finance: Driving Innovation through Research or Entrepreneurship?” [New blog post+related video on human capital by LinkedIn Co-Founder]

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  1. Pingback: The Old School Knowledge Dissemination and The Future of Islamic Economics and Finance - Yurizk | Islamic Finance, Islamic Economics

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