KFH-Research: Global trend to develop education programs in Islamic financing field
Development of education programs in Islamic finance in region is not up to par
20 institutions in Britain offer one form of education and training in field of Islamic finance industry
Education programs must reach schools and universities
A report prepared by KFH-Research revealed that there is a growing global trend towards education programs specialized in Islamic finance industry through setting specialized official education programs that will be taught at education institutions. This will develop the skills required for this industry and will take it to broader horizons. The report noted that this global trend was triggered by the growing demand for Islamic finance.
In addition, the report highlighted the importance of increasing awareness and education regarding Islamic products and services by organizers and market players, which will lead to a better understanding of Islamic banking.
The Islamic finance industry has experienced strong growth over the past decade, underpinned by the industry's strong financial infrastructure, institutions, and regulatory framework. Extensive interest in Islamic finance from different parts of the world is also driving the international dimension of Islamic finance. The Islamic finance industry is not only confined to Muslim-majority countries such as the GCC and Malaysia, but also into new territories such as the Far East and Europe, many of which are currently in the midst of implementing appropriate regulatory and legal reforms that would facilitate the provision of Islamic financial products.
Given this development, growth of the Islamic finance industry is expected to accelerate further moving forward. To sustain and support its future growth, it is crucial for the Islamic finance industry to develop the required talent and expertise in order to encourage innovation and drive the performance of the industry to greater heights. Malaysia, the United Kingdom and Australia are some of the countries that feature prominently in the Islamic finance education and training arena. Meanwhile, other countries such as India and Indonesia are still in the initial stage of developing more extensive qualifications to cater to the increasing demand for education, training and awareness in Islamic finance.
Educational Programmes in Various Countries
United Kingdom
The UK has been providing Islamic financial services for over 30 years and is currently the only western country to actively develop an Islamic finance industry. It is also the country most ahead of itself in terms of the number of qualifications offered relative to the size of the domestic Islamic finance industry. Today there are more than 20 institutions offering some kind of education or training in the field of Islamic finance. Courses in Islamic finance are offered by the Chartered Institute for Securities and Investment (CISI), Chartered Institute of Management Accountants, Association of International Accounts, Cass Business School and the Institute of Islamic Banking and Insurance.
Education in Islamic finance is also offered by esteemed universities such as the University of Durham. In 2010, Aston Business School of an Islamic Finance and Business Centre was launched in Birmingham to develop qualifications and advance research in Islamic finance. The Cardiff University Business School also aims to become the UK's hub for Islamic finance education. This was after the school had agreed to collaborate with the Islamic Banking and Finance Institute Malaysia (IBFIM) and the Islamic Banking and Finance Centre (IBFC UK). These universities offer Islamic finance courses at various levels, namely undergraduates, masters, postgraduate diplomas and doctorates of philosophy (PhDs).
These courses have been key to the development of Islamic finance qualifications in the UK, which range from introductory and entry level courses, to postgraduate level study and continuing professional development programmes, as well as Shariah scholar programmes.
France
Efforts have been taken by the French government to promote and develop Islamic finance and make the country an Islamic finance hub of Europe. In line with this aspiration, there are a number of institutions offering Islamic finance programmes in France - Reims Management School, Paris-Dauphine University, Grenoble, and French Institute for Islamic Finance, to name a few. Reims Management School Group led the way, offering the first Certificate in Islamic Finance in France, entitled "Islamic Banking and Finance". The objective is to respond to increasing interest in Islamic finance by offering professionals and students the possibility to study how Islamic banks and capital markets operate.
Germany
Many industry players are keen for the Islamic finance industry to develop further in Germany, not only as part of a social and financial inclusion policy initiative, but also to attract more investments and encourage trade and financial cooperation with Muslim countries. The Hochschule Bremen University of Applied Sciences currently offers the International MBA award in which students are able to choose to study global Islamic finance at Universiti Tun Abdul Razak in Kuala Lumpur, Malaysia.
United States
The US has the largest and most sophisticated financial system in the world which has benefitted from decades of economic growth and the liberalisation of financial regulation. However, Islamic finance is still considered as a niche industry in the US. The industry remains incredibly nascent with little appetite shown in the US for the Shariah-compliant products and services. Nevertheless, Islamic finance represents unique financial alternatives that are supported by strong and growing underlying demand. These factors are forecasted to provide a growth opportunity for existing market participants, at an above average rate, as compared to the broader market. In order to grow the existing business, institutional development, paired with the availability of skilled and educated human capital is imperative. Currently, DePaul University, Chicago, offers Islamic Banking and Finance as an elective module for certain undergraduate degrees while Georgetown University, Washington D.C. offers a Masters in International Business and Economic Law with an elective module in Islamic Finance. Nevertheless, it remains distinctly uncertain whether such initiatives will ignite much attention or interest with the government and the financial markets in the coming years.
Australia
Islamic finance is still a nascent industry in Australia but has great potential for development, underpinned by the sizeable domestic economy and financial market, political stability and geographic position. One of the challenges that need to be overcome is the lack of awareness of Islamic finance products and principles. To address this challenge, the Australian educational institutions and the government trade and investment agencies have also made laudable efforts to promote the Islamic finance sector. Many universities now offer subjects on Islamic banking and finance as part of a commerce/ accounting/ finance degree. These include Griffith University, University of Melbourne and Monash University. La Trobe University has also launched Australia's first Master's Degree in Islamic Banking and Finance and Master of Financial Analysis (Islamic Finance).
Pakistan
Since the mid-1960s, the government has undertaken proactive measures to promote the development of Islamic banking and finance in Pakistan. AlHuda Centre of Islamic Banking and Economics (CIBE) is a pioneering effort to promote Islamic Banking and Finance in masses through advisory, education, training, awareness and practice, with a view to support, sustain, spread and supplement the State Bank of Pakistan and government initiatives. Due to the lack of an institution or organisation providing advisory and training in the field of Islamic banking and finance in Pakistan, AlHuda-CIBE was created to fill this gap and to promote its pioneering efforts for the industry's future development.
Brunei
Since the 1990s, Brunei has been promoting Islamic finance as an alternative to conventional finance. In 2007, Universiti Islam Sultan Sharif Ali (UNISSA) was set up to offer degree programmes in Islamic finance and produce world-class graduates who can immediately contribute their skills and knowledge to the Islamic finance industry. In February 2012, the Centre of Islamic Banking, Finance and Management was officially launched. The Centre aims to provide continuous learning and development programmes through a balanced mix of Islamic and conventional study including the teaching of highly required soft skills. The centre is expected to offer and conduct approximately 50 programmes targeted for around 800 participants in 2012.
Malaysia
As one of the driving forces in global Islamic finance, Malaysia began its talent and research development plans as part of the ten-year Financial Sector Masterplan laid out in 2001 to improve the human capital and research fields of the industry. Over the years, the Islamic finance industry witnessed the establishment of IBFIM (2001), the Global University for Islamic Finance (INCEIF) (2006), and the International Shariah Research Academy in Islamic Finance (ISRA) (2008), to name a few. INCEIF was established to provide quality education and to create awareness in the field of Islamic finance through advancing Islamic financial knowledge. Meanwhile, ISRA was established to promote applied research in the area of Shariah and Islamic finance. Many public universities throughout Malaysia also offer undergraduate and graduate programmes in Islamic finance.
The recent Financial Sector Blueprint which charts the development of Malaysia's financial sector for the next 10 years (2011-2020) envisages that Malaysia will become an international centre for Islamic finance by 2020. To achieve this, the industry needs to be recognised as a reference centre for Islamic finance with Malaysia as the location of choice for knowledge development and talent management in Islamic finance. This can be achieved by enhancing Islamic finance knowledge propositions supported by a comprehensive talent development programme, such as:
Promoting educational standards and the accreditation of Islamic finance programmes
Supporting the introduction of structured training programmes to facilitate understanding of the specificities of Islamic finance
Introducing dedicated training programmes to prepare Shariah graduates for careers in Islamic finance
Middle East
The Middle East region is home to a large number of institutions which offer a wide range of undergraduate and postgraduate programmes in various fields. However, in terms of Islamic finance qualifications, the region is yet to develop the necessary high level certificates which merit great attention from the international community. Most of the dedicated qualifications remain diplomas and undergraduate degrees at best due to the lack of expertise and human capital in that particular area.
However, given the strong presence of Islamic finance in the region, we expect the situation to change in the near future. There is currently a trend in the market to incorporate Islamic finance related elective modules such as Islamic Banking and Financial Markets into postgraduate programmes such as a Master of Business Administration (MBA). In the future, education in Islamic finance in the Middle East can expect to see more dedicated qualifications been developed as the industry continues to grow and demand for higher level education increases.
Conclusion
Given that human capital development and education and training for the Islamic banking and finance industry has begun to mushroom in various countries in line with the industry's growth and development, there remains a need to ensure that the quality, industry relevance and global recognition of Islamic finance education and its related areas are not compromised. In this regard, the Association for Islamic Finance Advancement (AIFA) was established in April 2011 by a RM3.17mln grant from the Malaysian government as the main accreditation body for Islamic finance programmes worldwide. AIFA will collaborate with international accreditation bodies to develop the standards and curriculum for Malaysia's higher education institutions.
To ensure the integration of Islamic finance into the global financial industry, instead of marginalising it from the mainstream financial markets, educating the public and increasing market awareness is a great step towards achieving that goal. Apart from the formal educational programmes, more intensive education on Islamic products and services from both the regulators as well as industry players is required to stimulate public interest and build an improved understanding of the Islamic finance industry. In fact, such initiatives should be extended to the secondary school level so as to lay a solid foundation for knowledge of the Islamic finance system.
© Press Release 2012
