Role of leadership, values and ethics in driving Islamic finance excellence

Islamic finance and banking has expanded its presence globally, reaching 80 countries through approximately 1,400 institutions, with assets totaling around US$2.50 trillion. 

The inherent strengths and welfare focus of Islamic finance's profit-loss sharing banking system resonate widely with the people of Bangladesh. 

The global expansion of Islamic finance has spurred significant growth in Bangladesh's Islamic banking sector, which now commands roughly 30% of the market share within the entire banking industry, effectively meeting the aspirations and needs of the country's people. 

Presently, the Shariah-based banking sector in Bangladesh holds a substantial portion of the financial market, encompassing approximately 27% of deposits, 28% of investments, and 39% of remittances. 

Despite challenges, Bangladesh's Islamic finance industry has made significant progress. This growth is facilitated by the presence of 10 full-fledged Islamic banks, 30 Islamic banking branches operated by 15 conventional banks, and 615 windows provided by 15 conventional banks, all delivering Islamic financial services. 

As this sector continues to expand, there is an increasing demand for leadership, values, and ethics to guide Islamic finance towards achieving excellence.

Ethical foundations of Islamic finance

In the realm of Islamic finance, ethics and moral conduct reign supreme, serving as the guiding principles that underpin its operations and objectives. Since its inception, Islamic finance has been imbued with a steadfast commitment to upholding integrity and ethical behaviour, prohibiting any form of unethical conduct. 

This commitment extends to all facets of the financial services industry, emphasising the importance of talent development and professionalism as integral components of its overarching mission.

Role of institutions in talent development

The cultivation of talent within the Islamic finance sector is a multifaceted endeavour that requires the concerted efforts of institutions, including universities and professional bodies. These entities play pivotal roles in nurturing ethically-driven professionals equipped with the necessary skills and knowledge to navigate the complexities of Islamic finance. 

Central to this endeavour is the integration of Shariah principles into financial practices, ensuring that practitioners possess a deep understanding of both finance and Islamic jurisprudence.

Human intellectual capital and market competitiveness

Human intellectual capital stands as a cornerstone of Islamic finance, driving its performance and market competitiveness in a rapidly evolving global landscape. As innovation continues to reshape the financial services industry, the demand for specialised expertise and competencies within Islamic finance grows exponentially. Thus, the cultivation of a diverse talent pool becomes imperative for the sustainable growth and development of Islamic finance institutions.

Professionalism and ethical conduct

At the heart of Islamic finance lies a commitment to professionalism and ethical conduct, serving as pillars that fortify its relevance and sustainability over the long term. Practitioners are duty-bound to uphold the highest standards of ethical behaviour, guided by principles that prioritise the well-being of society. 

Professional credentials, such as the Certified Islamic Professional Accountant (CIPA), Certified Shariah Advisor and Auditor (CSAA), Certificate of Proficiency in Financial Accounting Standards (CPFAS) designations issued from AAOIFI, serve as benchmarks for excellence, ensuring adherence to sound and fair practices in a dynamic and evolving environment of Islamic finance. 

The role of compassionate leadership

Compassionate leadership plays a pivotal role in advancing the principles of Islamic finance, driving capacity development strategies and fostering a culture of integrity and professionalism within Islamic financial institutions (IFIs). 

Leadership must prioritise talent development as a core strategic initiative, leveraging key performance indicators (KPIs) to measure progress and impact. By championing ethical conduct and values-driven decision making, leaders pave the way for transformative change within the industry.

Embracing innovation and inclusivity

A key avenue for releasing this vision lies in the fusion of Shariah principles with modern financial instruments, enabling the creation of tailored solutions that address the diverse needs of society. 

Islamic financial institutions possess the unique capacity to engage in blended finance initiatives, leveraging philanthropic and risk capital to drive sustainable development efforts. By integrating Islamic social finance mechanisms, IFIs can uplift vulnerable communities and promote inclusive growth on a global scale.

The promise of digital financial services

The adoption of digital financial services emerges as a crucial catalyst for accelerating the growth and accessibility of Islamic finance. Through the establishment of Islamic digital banks and the expansion of digital takaful operators, IFIs can enhance financial inclusion, intensify market competition, and improve operational efficiency. 

Moreover, advancements in technology, such as blockchain and artificial intelligence, offer unprecedented opportunities to enhance transparency, accountability, and decision-making within Islamic finance.

Islamic finance education in Bangladesh

In Bangladesh, several institutions offer Islamic finance education, including Islami Bank Training and Research Academy (IBTRA), Bangladesh Institute of Bank Management (BIBM), Central Shariah Board for Islamic Banks in Bangladesh (CSBIB), Bangladesh Bank Training Academy (BBTA), Academy of Business Professional (ABP), Bangladesh Institute Islamic finance (BIIF), IFA Consultancy, United International University, and Eastern University. 

These entities provide a range of programs, from short courses to advanced diplomas and master's programs, as well as various certifications. However, industry stakeholders argue that the current offerings do not adequately align with the dynamic needs of the Islamic finance sector.

A call to action

Bangladesh stands poised as a burgeoning market for Islamic finance within the global industry, boasting the potential to emerge as a regional hub for such financial activities. Through seamless integration with the global Halal and Islamic finance market, Bangladesh anticipates substantial benefits, including enhanced national growth and bolstered foreign reserves, thereby positioning itself favourably for increased investment and economic prosperity.

As the Islamic finance sector continues to evolve, it is essential to reimagine the financial ecosystem through the lens of Shariah principles and ethical conduct. This entails exploring innovative fintech solutions that promote inclusivity, sustainability, and transparency while fostering greater collaboration and synergy within the ecosystem. Bangladesh, with developing its robust regulatory framework and supportive infrastructure, can stand to lead the charge in Islamic fintech innovation, driving meaningful change and progress within the industry.

Concluding remarks

In conclusion, the convergence of Islamic finance and fintech represents a transformative opportunity to revolutionise the financial landscape, empowering individuals and communities to thrive in a more inclusive and sustainable economy. By embracing technology and fostering a culture of ethical leadership and values, Islamic finance can unlock its full potential as a force for positive change, driving prosperity and well-being for generations to come.

Md Saifullah Azad, holding CIPA and CSAA qualifications from AAOIFI, Bahrain, serves as Assistant Vice President at Islami Bank Bangladesh PLC.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.