A shortage of qualified human capital is one of the most serious challenges facing the Islamic finance industry today. The Islamic Corporation for the Development of the Private Sector (ICD) has developed its Islamic Finance Talent Development Program (IFTDP) as a means of addressing this shortfall.
The search for human capital poses significant challenges to organizations faced with the need for global managers with international experience, and qualified specialists with multi-functional expertise. Organizations must consider investing in human capital as a strategic target and an essential requirement for future success.
The Islamic finance industry is no exception to this as it has to face the daunting challenge of satisfying its unique human capital requirements which durably affect its survival and long-term growth. The industry, if it is to grow, survive competition, and sustain, must have in place an excellent supply of human capital with the following capabilities:
- Competent knowledge of the principles of Islamic finance including a sound appreciation of Islamic financial products used in investment, corporate and retail banking, insurance, mutual funds, trade finance, accounting, leasing, legal and regulatory issues.
- Prodigious leadership competencies.
- Superb marketing skills.
- Sound knowledge of conventional finance practices and products.
It is pertinent to mention here that the standard recruitment approaches based on average performance and minimum competence, and the traditional approaches to hiring and keeping people, will not satisfy the requirements of the Islamic finance industry for human capital.
Given the huge potential for development in the Islamic world, and the increasing amounts of funds being invested in accordance with Islamic principles, the Islamic finance industry is expected to grow at an accelerated pace. To take advantage of such opportunities, the industry must compete effectively for business in the global marketplace by developing a wide range of Islamic financial services and products.
Human capital is needed to help the industry compete internationally and realize the envisaged growth. But the required human capital is not readily available.
Evidence for this comes from many quarters. Statistics from the International Islamic University of Malaysia (IIUM) show that two million finance professionals are required to fill various positions in Islamic financial institutions worldwide by the year 2020. This is a stark contrast to the estimated 92,000 finance professionals that were recorded as working in the Islamic finance industry in 2007. According to Dzuljastri Abdul Razzaq, the head of IIUM, Malaysia needs 40,000 Islamic finance professionals by 2020; while Indonesia will need 17,000 over the next three to five years.
The shortage of Islamic finance talent was also identified by Moody’s as long ago as 2008 as one of the key threats to the Islamic finance industry. The UK Financial Services Authority has also cited a shortage of qualified Islamic finance professionals as a major challenge to the growth of the industry.
At the same time,universities and business schools in the Islamic world are not giving due attention to Islamic finance. What they provide, to date, is very limited and too basic.
To overcome the shortage and ensure the required talent, Islamic financial institutions must invest more financial resources, time and energy to develop the human capital they need.
ICD strategy
The ICD, a key player within the Islamic finance industry, has designed a business strategy that focuses on developing Islamic financial channels, targeting direct financing of the private sector, and creating partnerships to shape the enabling environment for the development of the private sector.
Staffing these needs as well as our investees, where the ICD has a major share, poses a formidable challenge for the ICD as it has to search globally for managers with Islamic finance expertise and international experience, as well as highly qualified Islamic finance specialists with multi-functional experience.
IFTDP Program
Based on the difficulties faced by the ICD in finding talent for its channels, and realizing the importance of human capital development, together with the belief that attracting and retaining talent is the most powerful factor behind the success and excellence of organizations, the ICD established the Islamic Finance Talent Development Program (IFTDP) in 2011, to build a pool of highly talented young Islamic finance executives who are capable of supporting our needs and who seek to establish a long-term Islamic finance career.
The objectives of the IFTDP are to:
- Provide participants with on-the-job experience and exposure to the different aspects of Islamic finance.
- Develop the knowledge required to master Islamic finance, which includes Islamic economics, Islamic finance, Takaful, Fiqh Al-Muamalat, and regulatory aspects.
- Develop the skills and competencies required for high-level performance: which include analytical and conceptual thinking, effective communication, decision-making, problem-solving, teamwork, relationship management and negotiation.
Accordingly, the ICD is introducing the IFTDP as a strategic target and a requirement for the success of its channels development strategy as well as to contribute to the endeavors to ease the Islamic finance talent shortage by developing Islamic finance experts with the need to meet our needs listed earlier.
The IFTDP has been very well received and has so far attracted excellent talent with a strong passion for Islamic banking and finance and a keen desire to forge a career as an Islamic finance professional. The number of applications for Cohort 2 of the Program exceeded those of Cohort 1 by 33%; and the number of candidates shortlisted for interviews increased by 20%.
The IFTDP has been designed to provide Islamic finance experience through various and multifaceted engagements: which include on-the-job rotational assignments, class room training leading to the Certified Islamic Finance Professional (CIFP) qualification, coaching and mentoring, challenging assignments, visiting scholars and guest speaker forums.
The combination of the on-the-job training experience, intense exposure to the different aspects of Islamic finance and professional certification in Islamic finance will equip IFTDP participants with the qualifications required to hold key positions in the Islamic finance industry.