Financial institutions would want to pick those who are competent and experienced to ensure compliance is met
by ASILA JALIL / Pic by BLOOMBERG
ISLAMIC finance graduates need more training and familiarity to enhance the development of Islamic financial technology (fintech) and overcome the issue of scarcity within Shariah scholars’ levels of specialism in the industry.
International Shariah Research Academy for Islamic Finance senior researcher Prof Dr Younes Soualhi said while the country has an oversupply of graduates in Islamic financing, many still require hands-on industry training especially on technologies adopted by the finance industry.
“We have to acknowledge the financial disruption that is happening due to fintech and it requires scholars who are well-versed in the new landscape,” he said in a webinar organised by the Malaysian Financial Planning Council on Shariah wealth management and financial planning recently.
Salihin Shariah Advisory Sdn Bhd CEO Assoc Prof Dr Ahcene Lahsasna said the issue of competency among graduates arises because as scholars, they would be required to resolve “very complex issues” surrounding Islamic finance in Malaysia.
“Financial institutions would also want to pick those who are competent and experienced to ensure compliance is met,” he said.
On the topic of how Islamic and conventional banking practices differ in Malaysia, Ahcene said while the services offered by both systems may seem similar, the principal difference lies in the nature of products at offer.
However, he said the similarities between both types of banking should be viewed positively as it helps reduce discrepancies in the market.
“If the benchmark rate between Islamic and conventional banking is the same, it does not create panic and discrepancy when consumers jump from one institution to the other. We would also not see fluctuation,” he said.
Younes said Islamic banks in the country have yet to fully differentiate itself from conventional banks as it is operating within the conventional ecosystem.
He said the reason Islamic banking is still tied to conventional systems is due to regulators’ view that both systems should run in parallel.
“I do not think regulators are open to the idea of fully separating both systems and have 100% Islamic banking due to Malaysia’s nature of being a multi-racial society, so both systems have to go together,” he said.
Younes said the dual banking system also has a positive effect on the acceleration of Shariah fintech as Islamic banks are leveraging conventional systems.
He said Islamic banks are equally benefitting from conventional banks’ experience, as well as trials and errors in terms of technological adoption.
“Islamic subsidiaries of conventional banks are leveraging the conventional system and anything that is developed in the conventional system will automatically be applied in its Islamic window or subsidiary.
“As for full-fledged Islamic banks, they are benefitting from the overall development in fintech,” he said.