Business is booming for Islamic financial institutions across the Gulf Co-operation Council (GCC) and near region. But such is the demand for sharia-compliant financial products that, across the board, the number of people with appropriate skills and qualifications falls well short of what the region requires to meet industry growth projections.
According to a study by international management firm AT Kearney, released in December, Islamic banking in the region is growing at between 15% and 20% a year. And if it continues apace, 30,000 new Islamic banking jobs will have to be filled in the next decade.
Most of the new jobs will be required in the areas of product development and sales, rather than in operational areas, and “a large proportion will need retraining”, says AT Kearney manager Alexander von Pock, the report’s author.
Demand and supply
In the even more specialised area of takaful (Islamic insurance), there is also “enormous scope for the training of people”, says Omar Clark Fisher, senior director, head of takaful business development at Unicorn Investment Bank, based in Bahrain. He estimates that there are between 6000 and 8000 people operating in the takaful industry in the Gulf. But, for a region that is at least the size of Malaysia, which has about 80,000 agents, this number is tiny.
One of the main reasons that an increasing number of financial institutions are choosing to offer sharia-compliant products – either as an alternative to conventional financial products or as a replacement to them – is to differentiate themselves. To do this, institutions need to employ staff who are sufficiently talented and knowledgeable in the complexities of sharia law to allow them to innovate beyond plain vanilla products.
“Innovation is key,” says Dr Clark Fisher, adding that “most prime movers come from the conventional side” of the business. “There is a need for far-thinking individuals. Innovation depends on the quantity and quality of thinking.”
Sharia compliance alone is no longer a differentiating factor, however. “The adoption of strategic management practices holds the key to success,” says Dr Dirk Buchta, vice-president and managing director of AT Kearney (UAE). This means that Islamic financial institutions must understand their customers better, adapt the organisation and processes to enhance service quality and upgrade intellectual capital, “placing particular emphasis on staff qualifications”, he says.
Islamic financial institutions must also find the right balance between two seemingly contradictory requirements – an accelerated sharia approval process in tune with customer requirements and the diligence required for this task, argues the AT Kearney study.
With demand for staff qualified in Islamic finance outstripping supply, it is not surprising that salaries are going up. “Based on demand, salaries are increasing along with tempting offers, especially for individuals with good knowledge of the Islamic sector,” says Waleed Al-Rowaih, vice-chairman and managing director of Kuwait-based Gulf Investment House (GIH).
Chakib Abouzaid, CEO of Takaful Re, which has operations in Lebanon as well the Dubai International Financial Centre (DIFC), confirms that the skill shortage facing his industry is enormous. “We are really suffering,” he says, adding that he goes to Malaysia to recruit staff, using headhunters as well as his own networks, because there is such a dearth of talent in the region.
Mr Abouzaid also says his firm is looking for people who have not only technical expertise but also a belief in and commitment to sharia principles. “It can take a certain amount of time to convert to a takaful mentality,” he says.
Talent nurturing
Malaysia pays much greater attention to education and training programmes than countries in and around the Gulf, says Mr Abouzaid. He blames a “lack of vision” by industry bodies and governments for the failure to nurture the requisite talent in the region. Governments, regulators and associations have only a “macro-vision, not a micro one”, he says. “We need to have some understanding between the government and industry about our future.”
Mr Al-Rowaih says: “Staff handling Islamic investment and banking require a different skill set from conventional banking in several areas – although there are basic fundamentals that would apply to both sectors, such as an understanding of economics or having a finance degree.”
Where specific sharia expertise seems to matter most is in developing new products and explaining them to customers, rather than at the back-end, where functions are similar to conventional banking or insurance. Omar Al-Awadi, the head of human resources at Sharjah Islamic Bank in the United Arab Emirates, says: “It is only about the concept of developing the products.”
To upgrade and develop staff expertise in the area of Islamic finance, financial institutions are encouraged to invest more in staff training, either in-house or by working with associations and regulatory bodies. Dr Clark Fisher believes Islamic financial institutions need to put more resources into “workshops, internships and work studies”. He adds: “Young people need to roll up their sleeves and have direct involvement in Islamic finance. There is a limited supply of highly skilled, trained and knowledgeable staff.”
Many institutions, however, are starting to invest in Islamic training. For example, Sharjah Islamic Bank runs internal courses on topics such as Islamic credit and Islamic corporate banking, as does HSBC in the Middle East. SIB trains its staff in shariah principles to underpin its Amanah banking products.
“It is particularly important that staff use the right Islamic trading terminology and instruments with a clear explanation of the processes involved in each of them,” says Andy Bonito, regional manager learning and development at HSBC Bank Middle East. “Our training therefore needs to weave selling skills with operational and shariah knowledge as appropriate.”
He says that HSBC staff attend training programmes in Islamic banking and shariah that are offered by Emirates Institute for Banking Studies.
Lebanon-based L’Ecole Superieure des Affaires (ESA) is also renowned for its training in the principles of Islamic finance. Last year, the ESA and the Securities and Investment Institute in the UK jointly formed the Islamic Financial Qualification Institute to develop qualifications in Islamic finance.
The International Centre for Education in Islamic Finance based in Malaysia is also collaborating with various parties, including the DIFC, to bring its flagship programme, the Certified Islamic Finance Professional, to the Middle East. Agil Natt, the centre’s spokesperson, says financial institutions in the region must bear in mind that “there is no quick fix to build talent internally. Financial institutions must invest in training. There is also a need for a steep learning curve in order to develop well-rounded Islamic finance professionals.”
Filling vacancies
For the future, what Islamic finance institutions in the GCC must hope for is that, as more specialised courses in Islamic finance come on stream, the gap narrows between the number of people knowledgeable in Islamic finance and job vacancies.
Financial institutions specialising in Islamic offerings must also keep in mind that training is not an issue that is peculiar to them; investment in human capital is a pressing issue for all financial institutions.
“Having sufficient qualified staff is very much an internal issue of any financial institution,” says Mr Natt. The business expansion policies must be supported by robust human resource policies that include the need to attract, train, motivate and retrain staff.
“Product development and product innovation are the keys to success for business expansion in the banking industry. Financial institutions will have to re-orient their policies to create the higher internal capacity to deal with future business needs. This will require greater emphasis on human capital,” he says.
