The Islamic finance talent market has fundamentally shifted primarily due to the profound changes in the operating environment. Apart from the well-known ‘Great Resignation Phenomenon’, three key themes emerged from a talent perspective, which will shape 2022 for Islamic financial institutions, as we continue to weather COVID-19 impacts globally.
Review of 2021
Rapid shift to ‘on-demand, digital first’ business models
COVID-19 accelerated digital transformation. Whether a digital-only bank (in which case, going digital is the only choice) or a traditional bank, there is a dearth of talents that can drive transformation and elevate existing business models of Islamic financial institutions to either a digital-friendly or digitally-driven one.
Skills to enable data-driven decision-making are also scarce but needed. The lines of defenses and talents to maintain solid and strong information technology (IT) support, especially those familiar with cloud architecture, are also scarce. Aside from business-savvy IT skills, experienced talents capable of developing, maintaining and continuously enhancing cyber resilience and security; information security; skills to preserve data integrity; fraud analytics, detection, mitigation and prevention; and business continuity management are and will continue to be challenging to hire, nurture and retain.
An organization that embraces ‘state-of-the-art’ first-in-class technology stacks, while adopting an agile approach in its developments, will be preferred over those grappling with ‘end-of-life’ legacy systems and waterfall approach developments. Organizations that reskill the existing workforce to embrace digital transformations have the competitive edge.
Climate finance, net-zero targets and Islamic financial institutions
At the UN’s COP26 [2021 United Nations Climate Change Conference] in Glasgow in November 2021, it was clear that addressing climate change through country-wide emission reduction commitments has progressed. About 70% of the world’s economy is now covered by net-zero targets — the sense of urgency was felt, and the global warming ‘burning platform’ clearly acknowledged.
Countries, businesses and people in general need finance to fund their transition, hence climate finance. In 2018, OECD estimates US$78.9 billion-worth of climate finance was mobilized — Islamic financial institutions taking a value-based intermediation (VBI) slant should stake their respective share of this fast-growing market. Or at least, prepare to commit to align investments and financing activities with net zero.
Glasgow Financial Alliance for Net Zero (GFANZ) was launched at COP26, uniting over 160 firms managing assets of over US$70 trillion to lead initiatives across the financial system to net-zero emissions by 2050. They must be accredited by ‘Race to Zero’, using science-based guidelines and 2030 interim targets. GFANZ has 43 banks representing US$28.5 trillion through the Net Zero Banking Alliance, 87 asset managers representing US$37 trillion through the Net Zero Asset Managers Initiative and 37 asset owners representing US$5.7 trillion through the Net Zero Asset Owner Alliance.
Seventeen central banks have committed to stress test their financial system against climate risks, including Bank Negara Malaysia. Nature had tested our own insurance and Takaful sector with the unusually devastating floods in December 2021 and January 2022. Ready or otherwise, climate risks are affecting financial intermediation more frequently and in more profound ways than ever.
A closer examination will uncover that all these initiatives are in complete alignment with Shariah principles concerning the environment and climate preservation, reinforcing our role as vicegerents in ensuring the Earth is preserved for future generations.
This narrative is carried by 220 asset managers representing US$57 trillion of assets under management in the Net Zero Asset Managers Initiative, banks representing over 40% banking assets worldwide in the Net-Zero Banking Alliance and over 1,090 universities and colleges globally in the Global Universities and Colleges for the Climate. These are just some of them.
The message is clear: change or be subjected to change. Be the narrative or be driven by one. Islamic financial institutions can have their own unique VBI-driven net-zero commitments in this regard, leveraging the right committed talents to help meet these targets.
Clear articulation of Islamic financial institutions’ relevance
Good talents generally look for prestigious organizations with a solid reputation. Such entities are usually rooted on strong values and beliefs. As an industry, Islamic financial institutions branding from digital, climate and environment perspectives has yet to be clearly established. Islamic financial institutions must collectively articulate where they want to be and the type of talents they need to get there. Solid competitive propositions crafted from answers to the following may be beneficial:
• Islamic financial institutions’ digital capabilities, especially in reducing known frictions, scalability and reach. A handful of Islamic financial institutions in Malaysia have successfully done this and if replicated industry-wide, a digitally-enabled industry will result
• The uniqueness and extent of intermediating finance through Islamic financial institutions in furthering net-zero targets, and
• Islamic financial institutions’ effectiveness in assisting business and individual customers achieve their net-zero ambitions in ways unparalleled by other types of intermediaries.
The magnitude of the impact from these answers amplifies if Islamic financial institutions ‘walk the talk’ — consistently proving to be an industry capable of addressing critical needs and gaps ethically and responsibly. Such propositions tend to attract talents with the right headspace. Let’s start the journey — make the first of thousands of steps.
The opinion expressed in this article is that of the author’s and does not represent the opinion of the organization that the author is employed at or affiliated to.
Azleena Idris is a Chartered Professional in Islamic Finance, where she sits on the Professional Education & Academic Committee as well as International Chapter Committee. She is currently the director of the Corporate Services Division at Payments Network Malaysia (PayNet). She is also a short-term expert at the IMF and the World Bank and can be contacted at [email protected]