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As a qualified and experienced Islamic Banker, I have attempted to envisage the state of local and international Islamic Banking industry, growth dynamics, human resourcing requirements, functional roles and the challenges ahead for the Islamic Banking Industry. Moreover, this article further aims to be a source documents prescribing the mapping of the functional roles, skill requirements and the underlying career opportunities for the potential employees/young graduates and employers in Pakistan as well as in the GCC.
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www.cpifinancial.net ISSUE 78 | Islamic Business & Finance
W e live in an age of specialisation, where human resources can capitalise on the
opportunities created by the demand and supply of skilled professionals. Islamic finance practitioners, academia and training industry in Pakistan are very well positioned to make the most out of it.
Higher education institutions, being one of the major producers of human resources to Islamic financial institutions (IFIs), ought to train, create awareness and provide career orientation to their graduates to exploit careers in IFIs locally as well as globally.
As a qualified and experienced Islamic banker, I have attempted to envisage the state of the local and international Islamic banking industry, including growth dynamics, human resourcing requirements, functional roles and the challenges ahead for the Islamic banking industry. In this article, I have tried to map out skill requirements and the underlying career opportunities for potential employees and young graduates, and employers in Pakistan as well as in the GCC.
INDUSTRY AT HOMEPakistan’s Islamic banking industry surfaced in 2001 and claims to be a PKR 711.00 billion (approx $7.00 billion) industry comprising five indigenous banks and 12 Islamic windows with a branch network of 964 branches, 500 windows and a nationwide presence. Pakistan’s nascent industry has a YoY growth rate of 30 per cent. This growth has been galvanised by optimal
profitability with Return On Equity of 15 per cent.
GROWING DEMANDReportedly, bankers, economists and investors are moving towards an Islamic economic system because they have realised that this emerging system can be an alternative after a capitalist system has harmed so many.
Moreover, S&P highlights a dazzling growth potential for Islamic banking, thanks to a young, fast-
growing Muslim population, robust macroeconomic environments, large infrastructure projects that require financing, formation of Shari’ah-compliant indices for companies listed in stock markets and recent political developments in several Muslim-majority countries.
In 2008, the State Bank of Pakistan (SBP) in its five-year strategic plan, stressed the importance of strengthening human resources to eventually strengthen Islamic banking.
Muhammad ArsalanAqeeq takes Pakistan as a case study for developing an education system that would provide the Islamic finance industry with the skills it so desperately needs
Career opportunities
Muhammad ArsalanAqeeq
cont. overleaf
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As with all developing sectors, the Islamic Banking Industry (IBI) also suffers from a lack of candidates specifically trained in Islamic banking.
Conservative estimates based on the methodology adapted by SBP strategic plan 2008-2012 project that the industry will need 22,000 qualified personnel by 2017, as compared to the 15,000 currently available. Based on international best practices the 22,000 employees needed by 2017 translates to one per cent, or 200 senior managers, 15 per cent or 3000 mid-level managers and 84 per cent or 16,800 front line or field staff. This defines the capacity needed for developing the different levels of human resources.
In order to meet the specific requirements of the industry that focus on relevant areas at multiple levels, there is a need to have a specialised institution in the country that caters to specific industry requirements and is structured to provide focus in specific areas. Higher education institutions and business schools need to realise and tap the potential of the Islamic finance industry and its appetite for qualified Islamic bankers. Higher education institutions are expected to roll-out internationally accredited academic and professional qualifications and programmes to facilitate the industry in developing the human resources which it needs to be sustainable.
HELP NEEDEDCandidates need to be well-versed in conventional banking practices as well as Islamic banking and must be able to understand and communicate the difference between the two. Given that there is a religious background to Islamic banking there exists a need to understand the basic principles of Islam in relation to financial transactions. The requirement for better-qualified personnel has increased particularly in Product Development, Risk Management, and Shari’ah compliance.
Staff level distribution as per international standards*Additional Staff Required by 2017 22000
Senior Manager 1% 220
Mid-level managers 15% 3300
Front line Field staff 84% 18480
Projected Growth %
Estimated Human Resource Requirement Projections
Human Resource[Avg.
Head Count 15/branch]Year Assets Rs inBn Branches
20 2012 712 1,000 15,000
20 2013 855 1,772 18,000
20 2014 1,026 1,440 21,600
20 2015 1,231 1,728 25,920
20 2016 1,477 2,074 31,104
20 2017 1,772 2,488 37,325
Relationship/Branch Managers
Front office professional, General banking & relationship management skills along with thorough shariah product knowledge.
Islamic Corporate/Investment Bankers
Front office personnels, Corporate lending, credit risk & shariah facility structuring.
Shariah Product Development
Specialist function with sound knowledge of Islamic commercial law, product development and banking operations.
Shariah Compliance Auditor/ Officer
Exclusive Islamic Banking requiring Shariah Product and processflow knowledge for shariah governance and control.
Risk Managers Risk management knowledge for market, credit and operational risk in addition to shariah related facility risk and shariah compliance.
Trade Finance Manager
Trade finance , International Codes, UCP along with shariah modalities and transaction process flows requirements.
Operations Manager General banking operation knowledge with knowledge of shariah accounting treatments and flows
Treasury ManagerTreasury, FX, Market Risk, Asset Liability Management with shariah compliant invesments & liquidity management expertise.
Islamic Equity & Mutual Fund Manager
Portfolio management, asset risk profiling, fixed and equity markets along shariah screening and compliant investments.
Takaful ManagerActurial underwriting, risk profiling, premium and portfolio management along with shariah contractual arrangement and shariah investments.
Shariah Advisor The centripetal body holding the riegns of shariah governance, control and compl. Authority and Subject matter expert on Shariah, Fiqa, Islamic Commercial Law
SITUATIONS VACANT IN ISLAMIC FINANCE
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Muhammad ArsalanAqeeq is an experienced Islamic banker from Pakistan. He holds a Diploma in Islamic Finance from CIMA and has experience in corporate lending, syndication finance, project finance, credit risk review, cash flow analysis, financial modelling and credit origination functions for conventional and Islamic banking institutions. He is an independent corporate trainer and research supervisor in premier academic organisations like the Institute of Bankers Pakistan, Karachi Institute of Economics and Technology and the Shaheed Zulfiqar Ali Bhutto Institute of Science and Technology. He may be contacted at: [email protected]
Candidates need to be well-versed in conventional banking practices as well as Islamic banking and must be able to understand and communicate the difference between the two
Islamic banks’ personnel must be proficient in conventional banking operations and product structuring and they should be able to explain to customers the differences between Islamic and conventional product structures. Consequently, the demand for Islamic banking and finance education and training has increased and the number of institutions providing higher education and training for Islamic banking and finance is also increasing.
THE REAL CHALLENGEThe human resources produced by conventional academic programmes cannot meet the demands and skills set of the Islamic financial institutions, which require highly-competent and motivated candidates with required knowledge of conventional banking as well as knowledge of Islamic
economic principles.Being a nascent industry with 11
years of history, existing conventional finance professionals need to be trained to shrink the shortage of experienced professionals.
The shortage of skilled professionals is graded as the one of the key impediments to the growth of the Islamic finance industry locally in Pakistan, where Islamic finance has an eight per cent penetration rate, as well as globally, which can only be addressed by higher education institutes.
CAREER OPPORTUNITIESIn the terse words of the Governor of Bank Negara Malaysia Dr. Zeti Akhtar Aziz, ‘‘Islamic banking and finance is a ‘mirror of the sea’ for until and unless we have the courage to explore its depth, we would never be able to uncover the treasures that reside within.’’
Apposite education is the key enabler towards the exploration of the treasures of this sea. State Bank of Pakistan- NIBAF Program, International Islamic University Islamabad, Daar-ul-Uloom Karachi, MBA in Islamic Finance Muhammad Ali Jinnah University, ShaikhZayed Institute University of Karachi are a few big names engaged in Islamic finance programmes. But, its adequacy to meet the estimated demand of over 20,000 personnel in the upcoming five years remains a moot point. Moreover, accreditation and recognition of these programmes
from bodies like AAOIFI, INCIEF, ISRA, IFSB etc. also call for more focused efforts.
WORLD OF POSSIBILITIESBeing a specialty domain, there are good prospects for skilled youths to export their expertise to GCC and MENA countries, Malaysia, Oman and even to emerging western markets like Australia.
India, one of the biggest exporters of human resources to the GCC, doesn’t have a local Islamic finance industry and thus leaves Pakistan the sole regional provider of human resource, making competition irrelevant.
Islamic finance qualifications and academic programmes also attract Islamic studies and Fiqh students to mainstream employment opportunities by training them on modern Islamic banking and finance skills.
A career in Islamic finance covers a variety of human resource profiles and backgrounds to serve functions like Shari’ah compliance auditor, product development, Shari’ah advisors, fund managers, operations manager, Islamic treasurers, business managers and Takaful portfolio managers.
Currently, there is a skill-to-employment gap prevailing in the Islamic banking and finance industry in Pakistan. Higher education providers must also come up with standardised and internationally accredited programmes and initiatives to serve the emerging demands of the global Islamic finance industry.
