Innovation is the key to the future success of the Islamic finance industry and to meet the challenges of contributing to economic growth and to facilitate internationalization of the industry.
According to Nor Mohamed Yakcop, minister in the prime minister’s department in Malaysia, “the Islamic financial system has to continually innovate and adapt in order to be competitive. At the same time, innovation is also the driving force behind developing greater diversity of products and services. Therefore there is a need to focus on product innovation and development efforts that will provide a comprehensive array of Shariah-based products for the industry.”
Yakcop was speaking at the KLIFF Islamic Finance Awards dinner which was held recently in Kuala Lumpur. While he may have been speaking in a Malaysian context, his words apply to the Islamic banking industry in general.
Yakcop is no ordinary observer of the Islamic finance industry. He together with others is the architect of the Malaysian Islamic financial system when he was adviser to Jafaar Hussein, the then governor of Bank Negara Malaysia, the central bank, and effectively helped the governor to implement his dream of developing a dual banking system in the country — an Islamic banking system operating side-by-side a conventional one, cooperating but not interacting.
He was also the pioneer of Malaysia’s bilateral payments arrangement of settling accounts between central banks rather than using expensive correspondent banking services in London, New York and Frankfurt; a prime mover behind the concept of an Islamic dinar to settle trading accounts between Muslim countries.
However, Yakcop warned that while in Islamic finance, innovation has been significantly pervasive, the industry needs to further accelerate the innovation momentum to ensure that it achieves its objectives and aspirations. The challenge to innovate and adapt at the same time must be based on the core principles and values as well as the ethics of Islam.
“For innovation to become an important driver of growth, a critical area that needs attention is addressing the shortage of skilled and experienced professionals in the industry. WE need to build a pipeline of talents who have the ability and creativity to develop new ideas and the capacity to run ideas into achievable results,” added Yakcop.
The greater awareness of the inbuilt strength of Islamic finance has contributed toward the increased international participation in Islamic financial markets. Indeed Malaysia has benefited from the internationalization of Islamic finance.
Source: Noor Islamic Bank Social Media