Although Islamic banking is more developed than banking specifically related to other religions, the notion that religious beliefs are irrelevant for conventional banking is incorrect. Secularization should not be seen as a long-term trend, but rather as part of a cycle. Far from being secularized, I suspect the western world will be much more religious by the end of the 21st century than it was at the beginning. Religion is already playing a growing role in China and India, and clearly throughout the Muslim world, faith is stronger than ever. Banking and finance cannot be isolated from the clients being served, whose beliefs matter. Investors want to accumulate wealth, but that is not their sole goal and certainly not the most important factor in their lives. Bank clients are concerned with returns and the costs of their funding, but most people also care about moral and ethical issues, even though they may not use ethically designated products. What I envisage is conventional financial institutions becoming more and more aware of faith issues. All the leading conventional banks already offer Islamic financial products. We may eventually see products emerge for those of other faiths.
PROFESSOR RODNEY WILSON
I think that faith-based banking and financing methods, training on social responsibility, honor and trust and values will slowly be implemented in the conventional banking system. After all, the FIRST riba-free banker in soul, thought, action and spirit was portrayed by James Stewart in the well-known Frank Capra Christmas movie, It’s a Wonderful Life. DR YAHIA ABDUL RAHMAN Founder, the LARIBA System
The interesting point here is that conventional banking IS ‘faith-based’. The very word ‘credit’ is actually Latin for ‘he believes’, and the current banking system consists of credit issued by ‘credit institutions’ (i.e. banks) and supported by a small amount of ‘regulatory capital’ set by the Bank of International Settlements in Basel. So, conventional banking is indeed almost entirely ‘faith-based’, and we are seeing now, I believe, the collapse of that faith, following an inflection point which may come to be seen as the point of ‘peak credit’. I believe that it is new forms of ‘asset-based’ banking which will come to overtake conventional banking, and necessarily this will be sooner, rather than later. Bankers will come to act as service providers rather than intermediaries in respect of new forms of ‘unitized’ and ‘asset-based’ investment on the one hand, and mutualized credit creation on the other. Such an ‘asset-based’ financial system would, of course, be entirely consistent with Islamic values, unlike the current ‘faith-based’ system currently in decline. CHRIS COOK Principal, Partnerships Consulting
The Islamic industry’s first aim or target should be to formulate, in true form, a parallel transparent, robust, ethical financial system with unified/adopted standards and, more importantly, reaching a size of, say, US$50 trillion. Once this is achieved, then perhaps the question will emerge. Mind you, the conventional system has taken centuries to develop. IJLAL ALVI CEO, International Islamic Finance Market
Not in the near future. Let’s not confuse our wishes with reality. All Islamic banking assets are less than one large conventional bank’s assets. KHALID MAHMOOD BHAIMIA Managing director, Hong Leong Islamic Bank
Faith-based banking is not a new phenomenon, but rather one that has been around for a long time. Every religion has an impact on society, and many religious beliefs have found themselves incorporated in the banking system for at least some time during the history of finance. Faith-based banking does not just appeal to those of a particular religion, either. The application of principles of fairness and justness is attractive to a large and diverse investor and depositor base, regardless of their religion. On the other hand, faith-based banks are typically small compared to their conventional counterparts, with only a fraction of the balance sheet size. Although interest in faith-based and socially responsible investing exists, it is expected to remain a subset within the conventional mainstream financial markets. DR NATALIE SCHOON Head of product management, Bank of London and the Middle East
In a few markets and segments it will, but not globally. AFAQ KHAN CEO, Standard Chartered Saadiq
Faith-based banking shall overtake conventional banking due to it being acceptable to a larger audience. Today, for example, in the UAE and Malaysia, faith-based banking is growing at a phenomenal rate since it offers features and services that are the same as or better than conventional banking model. In the UAE, it is expected that 60% of new mortgages will be Islamic. In Canada, a major meat supplier recently converted its entire slaughter process to halal methods in order to serve the Muslim market and the conventional market with the same product. With Muslim community wealth increasing over time, many conventional banks are converting products to be Shariah compliant to be able to serve the growing market. OMAR KALAIR CEO and president, UM Financial Canada
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