ISFIRE February 2019 issue by aatazazfaisal

L O N D O N VOLUME

NO.1 ISFIRE REVIEW

ISLAMIC FINANCE IN TANZANIA: ANY MISSING POINTS?

FEBRUARY

2019 TALKING POINTS

DIGITAL MYOPIA:

WIDENING PERSPECTIVE TO ACHIEVE BUSINESS GROWTH

AN EXCLUSIVE INTERVIEW WITH

ESAM ALKHESHNAM

CHIEF EXECUTIVE OFFICER

INTERNATIONAL TURNKEY SYSTEMS GROUP (ITS)

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NOTE FROM THE

EDITOR W

IN CHIEF

ith 2018 almost a memory, we welcome 2019 with open arms and wishing all of our readers the very best for the year. I do feel like 2019 has a very positive vibe about it. And if I had to pick one word to describe 2019 it would be “innovation”.

But innovation is not just a corporate thing! We often think of innovation as something that we do to a business or a product rather than something we also need to do to ourselves. Like organisations, individuals need to innovate. Personal innovation is about making a change in your life with the aim of making your world a better place. It begins with new thinking and new approaches to dealing with one’s personal life, professional life, and relationships. In this issue, we have the shared wisdom of contributors that can guide you to look at ways to innovate yourself. Look out for articles on Get Your Idea Off The Ground, 7 Clouds of Success for Budding Entrepreneurs, and The How-To Of Thought Talks and Critical Conversations. Esam AlKheshnam, CEO of International Turnkey Systems Group (ITS), our cover page personality, is one of the leaders in the space of innovation when it comes to technology in the Islamic financial services industry. Esam Alkheshnam shared his views on how Fintech is shaping up in the new age of Islamic banking, and ITS’s role in supporting the industry’s progression. This issue also features articles on innovation in Islamic finance. The article on The Significance of Sukuk-Waqf For Economic Development suggests sukuk-waqf as a suitable instrument to mobilise funds in a sustainable way as it combines the flexibility of sukuk and the sustainability of waqf. Another insightful article proposed the promotion of Islamic social entreprise as a means to support the third sector economy in easing the needs of those unfortunate and middle class citizens. As always, I’d like to hear your thoughts, feedback, or about a particular topic you are interested in. HAPPY NEW YEAR AND ENJOY THE ISSUE!

Dr. Sofiza Azmi Editor-in-Chief

ISSN 2049-1905

FOUNDER

Professor Humayon Dar Chairman, Edbiz Corporation

EDITOR-IN-CHIEF Dr. Sofiza Azmi

CEO, Edbiz Corporation

INTERNATIONAL EDITORIAL BOARD Dr. Hylmun Izhar Islamic Development Bank

Professor Mehmet Asutay Durham University

Professor Dr. Mehmet Bulut Istanbul Sabahattin Zaim University, Turkey

Dato’ Dr. Asyraf Wajdi Dusuki Islamic Finance Expert

TABLE OF

CONTENTS FEBRUARY

Professor Joseph Falzon University of Malta

Dr. Mian Farooq Haq State Bank of Pakistan

Professor Kabir Hassan, The IDB Prize Winner 2016 University of New Orleans

Dr. Rizwan Malik Islamic Finance Expert

Moinuddin Malim Alternative International Management Services

Dr. Aishath Muneeza INCEIF

Dr. Asmadi Mohamed Naim Universiti Utara Malaysia

Professor Muhamad Rahimi Osman Universiti Teknologi MARA

M. Saleem Ahmed Ranjha Wan Miana Rural Development Programme

Dr. Irum Saba Institute of Business Administration, Karachi

Dr. Mughees Shaukat College of Banking and Financial Studies, Muscat

Dr. Usamah Ahmed Uthman King Fahd University of Petroleum & Minerals

ADVERTISEMENTS, COMMERCIAL AND SUBSCRIPTION ENQUIRIES Faisal Mehmood E: fmehmood@edbizconsulting.com T: +44 (0) 203 617 1089

PUBLISHED BY Edbiz Corporation Limited United Kingdom T: +44 (0) 203 617 1089 E: info@edbizconsulting.com W: www.edbizconsulting.com

TALKING POINTS

10 Islamic Finance In Tanzania: Any Missing Points? Khalfan Abdallah, CIFE 20 The “How-To” of Tough Talks and Critical

Conversations Hessa Al Ghurair

26 Integrating Innovation in Development Projects Naguib Chowdhury 72 Digital Myopia: Widening Perspective To Achieve

Business Growth

Ahmed Albalooshi

ISFIRE REVIEW

14 Islamic Social Enterprise For Community

Empowerment and Enhancement

Muhammad Iqmal Hisham Kamaruddin 32 The Significance of Sukuk-Waqf For Economic

Development

Abdessamad Raghibi 66 Risk Sharing vs Risk Transfer: Identifying

Fault Lines In Conventional Finance

Dr. Mustapha Abubakar 78 Honestly dis-honest: A behavioural model of

financial dishonesty Junaid Sahibzada

22 14 90 What a brave new world it is to be: The

democratization of banking and finance through technology! Mufaddal Idris Khumri

POINT OF VIEW

30 Teamwork, Ownership, Professionalism Nora Tahir 38 Seven Clouds of Success for Budding

Entrepreneurs

Mohammed Asif 70 Get Your Idea Off the Ground!! Muhammad Ashraq-Ur-Rehman

COVER STORY

22 Esam AlKheshnam CEO, International Turnkey Systems Group (ITS)

PERSPECTIVES 58 Challenging 2018, Hopeful 2019 84 Can Ethics Be Taught and Learned?

ISFIRE REPORT

42 4th Islamic Retail Banking Awards 2018

Honours the Best of the Best in Global Islamic Retail Banking

ISFIRE PERSONALITY

56 Nasha Pedra Aziz Director, Regional Head of Islamic Legal, CIMB Islamic 76 Abed Hakim AVP, Head of Social Media, Dubai Islamic Bank, UAE

This publication is provided for information purposes only and should not be treated as financial, legal or policy advice in relation to Islamic banking and finance in general or to any Islamic financial institution in particular. The reader should not act on the basis of the information contained in this publication without having obtained individual, expert advice. In this respect, publishers, editors, contributors, sponsors and other supporters of the publication do not assume responsibility for any damage resulting from decisions made by the reader on the bases of the information contained herein.

TALKING POINTS

ISLAMIC

FINANCE IN TANZANIA:

ANY MISSING POINTS? KHALFAN ABDALLAH, CIFE

2018 marked a decade since Tanzania witnessed introduction of Islamic financial products in the country. At inception, we could sense high expectations and hear expression of interest from both the demand side and the supply side. Several stakeholders came in to support the infant industry in the making - from the regulator, industry players to education providers. While there are several gains on the way, there are also missing points or opportunities. In this short article, I intend to highlight five of them, namely; foreign direct investments, pro-active government policies, unified industry led advocacy, blended high education learning and financial technology impact.

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TA L K I N G P O I N T S

W W W. I S F I R E . N E T

TALKING POINTS

FOREIGN DIRECT INVESTMENT (FDI)

Unlike neighbouring Kenya, which has attracted a portion of FDI into the Islamic finance industry from the Middle East, Tanzania’s Islamic finance industry has yet to witness any significant investors attraction from abroad. Excluding ‘Islamic windows’ of conventional banks with diverse range of investors, investors in the only one fully fledged Islamic bank and several Islamic microfinance institutions remains locally composed. Is FDI crucial to the Islamic finance industry? It is! Sound strategies to attract FDI to the sector would have created more job opportunities suitable for our young undergraduates in Islamic finance/banking fields, increased foreign currency to the country, increase Islamic financial product innovation through competition and enrich existing knowledge from the experience of other Islamic finance/ banking players. So far, Kenya appears to have well positioned itself from inception and has reaped new investors with the entrance of Dubai Islamic Bank and recent announcement of another Islamic bank from Bahrain that plans to enter the market in coming years. Tanzania will have to put what it takes to attract FDI to the sector, otherwise we shall continue to miss a huge FDI opportunity. PRO-ACTIVE GOVERNMENT POLICIES

Generally, clear government policies together with a conducive legal and regulatory framework provides comfort not only to existing investors but also to potential investors. With ten years of Islamic banking experience, it is hope that one day the Tanzanian government shall bring to light clear policies that recognizes Islamic finance and its potential to spearhead financial inclusion and economic development in the country. Legal and regulatory framework needs to be put in place so that Islamic finance industry players can operate on equal footing with conventional counterparts rather than being seen as operating on the sidelines or at the mercy of regulators. It is positively projected that once drafted legal, regulatory and supervisory framework for Islamic banking, takaful (Islamic Insurance), Islamic capital markets and Islamic microfinance together with requisite policies come to light, it shall be a step forward in the right direction. Until then, much is left to speculation or luck!

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TA L K I N G P O I N T S

TALKING POINTS

Perhaps, the absence of these crucial elements help explains why Tanzania seems unattractive to foreign direct investments. Across the boarder in Kenya, its efforts to be the Islamic finance centre has distinguished itself in this area through its vision 2030, policy formulation discourses with stakeholders, banking law and tax laws amendments has provided support for Islamic financial industry players. More than once, government high ranking officials including cabinet secretary have made pronouncements that shows the government’s commitment to support Islamic finance industry in its totality; i.e not only on banking but also in insurance, capital markets, pension funds, microfinance among others in order to be on top of peers in the region. No wonder such honest measures, have started to attract attention of many investors looking to invest in this part of the world. UNIFIED INDUSTRY-LED ADVOCACY

It is long over-due for the Islamic industry players in Tanzania to come together and co-operate in areas of common interest such as enhancing frequent engagement with policy makers to recognize its existence and role it can play for the country, engage central bank for provision of Shari’a-compliant instruments to manage excess/short liquidity among others. Employee development and creating public awareness is another area that requires stakeholders to jointly address in order to to have competent workforce that combines theory and practice as well as demystifying misconceptions or misinformation in the public domain. The Bank of Tanzania Training Institute and Tanzania Institute of Bankers (TIOB) should be strategically engaged to appreciate the need of incorporating Islamic banking in their training programs or course contents. These initiatives can only be possible with far-sighted leadership of these institutes but also with consistent advocacy of Islamic finance industry leaders. BLEND THEORY AND PRACTICE AT HIGH EDUCATIONAL LEARNING

Tanzania is privileged to have two universities that offer bachelor’s degrees among others in Islamic finance/banking Zanzibar University and Muslim University of Morogoro.

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TA L K I N G P O I N T S

It is high time for the industry players to cooperate with these universities among others in order to introduce blended learning whereby industry practitioners shall be given an opportunity to improve Islamic banking and finance course contents to suits industry needs or train students on the practical side of Islamic banking operations either through visiting lectures or professional meetings with student aspiring to be Islamic finance professionals. On the other hand, the academia should establish cooperation with the industry to conduct research that addresses challenges facing the industry and offer practical ways to resolve them. Other universities particularly public ones that offer finance and banking specializations should be sensitized to feature Islamic banking and finance in their course content or even as an ‘emerging issue’ to start with. Furthermore, commerce subject in secondary schools at both O’level and A’ level should be revisited to feature Islamic banking as contemporary emerging trend in banking industry.

TANZANIA IS PRIVILEGED TO HAVE TWO UNIVERSITIES THAT OFFER BACHELOR’S DEGREES AMONG OTHERS IN ISLAMIC FINANCE/ BANKING ZANZIBAR UNIVERSITY AND MUSLIM UNIVERSITY OF MOROGORO.

FINANCIAL TECHNOLOGY [FIN-TECH] IMPACT

Some conventional banks have enjoyed great profitability margins and penetration through mobile wallet loans and deposits, Islamic finance industry players in Kenya and Tanzania have yet to tap into this potential. Is it a high target to be pursued or is it too comfortable where we are and thus waiting to wake up and see no cheese before we embrace fin-tech? The day when the region witnesses the Shari’a-compliant version of platforms such as Mkopo Rahisi or Tala, Branch, Cash Now etc, this will bring transformation to the Islamic finance industry for good. In Kenya, deliberations to have Shari’a-compliant alternatives to M-shwari of CBA as well as M-Akiba bond is currently underway.

KHALFAN ABDALLAH IS MANAGER (HEAD), PDSC AT GULF AFRICAN BANK LTD.

You may be tempted to ask me, what other measures can be taken to address these missing points or opportunities? Well, much I have already said… more importantly, let us remind each other something positive is missing, something positive can be done and needs to be done. And if nothing is done, we should remain ‘reminders’ who shows where we lag behind and on this, but we should never give up!

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ISFIRE REVIEW

ISLAMIC

SOCIAL

ENTERPRISE

FOR COMMUNITY

EMPOWERMENT

AND ENHANCEMENT

MUHAMMAD IQMAL HISHAM KAMARUDDIN

he Islamic Social Enterprise (ISE) is increasingly gaining attention due to its flexibility to perform trading activities for income generation while at the same time offering societal contributions. The role of ISE is greatly viewed from value-based perspective, where ISEâ&#x20AC;&#x2122;s objective is to support the Islamic third sector economy in easing the needs of those unfortunate and middle class citizens. In this regards, ISE plays a crucial functional role in generating wealth for societal purpose, either in the form of a small independent entity, wing of non-government organisations (NGOs), local entity or international-based entity. An example would be Islamic Relief, a worldwide Islamic non-profit institution (NGO), which has its own ISE outlets known as Charity Shoppe. Others that falls under the same criteria are include such Waqf Annur Clinics in Malaysia, Baitul-Mukarram Complex in Bangladesh and Baitul Maal wat Tamwil (BMT) in Indonesia. There are increasing numbers of ISE with varieties of services offered; including education, healthcare, hospitality services and consumer goods trading. This type of institutions is established from capital (in the forms of goods or money) that is collected via donations and almsgiving. ISE fulfils the needs of the needy by offering goods and services at affordable prices and fees, whereas at the same time provides income for its own sustainability. Although at present there are some understandings on what constitute ISE, there is still a great deal of uncertainty and imprecision with regards to the definition of ISE. WHAT IS ISLAMIC SOCIAL ENTERPRISE?

Altruism and almsgiving are honourable traits in Islam. A number of mechanisms in the Islamic traditions have been established to accommodate these purposes. These include waqf, zakat, sadaqah, hibah and qard hasan contracts. With the increase in both the numbers and types of waqf assets, the management of waqf institution has become more innovative in generating income from waqf assets to benefit its large numbers of recipients.

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Meanwhile, another similar institution that has now gained worldwide recognition is the zakat institution. This institution is dedicated for the collection and distribution of funds as per the specific requirements of the zakat contract, where the function is in contrast to ISE. Hence, not all Islamic charitable contracts are applicable in the case of ISE. So what is ISE? Basically, ISE is derived from the concept of Social Enterprise (SE), which has been identified as one of the solutions to societal challenges related to inequality caused by the gap between the rich and the poor. SE practices foster the empowerment of communities in a sustainable manner through the promotion of local innovation and support of entrepreneurship in rural communities. The term ‘social enterprise’ is often used interchangeably with several related terms such as volunteerism, social work, welfare and entrepreneurship. The terms infer two areas, namely social and entrepreneurship. These two areas are then combined to form SE. SE has been viewed from many aspects such as from the perspective of its objectives, activities and forms of establishment. SE is a revenue-generating business with primarily social objectives where surpluses are reinvested for that purpose in the business or in the community, rather than being driven by the need to deliver profit to shareholders and owners. In relation to SE’s activities, SE can be seen as a private organization that is dedicated to solving social problems and serving the disadvantaged by providing goods that may not be sufficiently delivered by the public or private sector. Although ISE is derived from the concept of SE, ISE operates on Islamic principles and additional values as compared to SE. There are three important Islamic concepts that are closely related to every Islamic organizations including the ISEs: (i) al-falah (success in this world and hereafter); (ii) maslahah (public interest); and (iii) Maqasid shari’a (Islamic objectives). In order to achieve the objectives of al-falah and maslahah, ISE must operate based on maqasid shari’a. For this, there are five basic elements under maqasid shari’a that needs to be considered for every activities and decisions made by ISE: (i) preservation of faith, (ii) preservation of life, (iii) preservation of intellect, (iv) preservation of posterity and (v) preservation of wealth.

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MAQASID SHARI’A AS THE FOUNDATION OF ISE

The objective of all Muslims is to achieve al-falah, in this world and hereafter. Consistently, to achieve this attainment, human behaviour should be guided by Shari’a (Islamic law). Maqasid shari’a or the objectives of Islamic law are used widely to guide legal decisions, especially when there are dynamic changes in the society that did not exist in the past. The main objective of Shari’a (maqasid shari’a) is to realise goodness and prevent harm among humans, and thus guide humans in the best way. As highlighted by Ibn Ashur, maqasid shari’a is the acquisition of what is good and beneficial (jalb al-masalih) and the rejection of what is evil and harmful (dar’ al-mafasid).1 Al-Shatibi defines maslahah as ‘a principle that concerns the subsistence of human life, the completion of one’s livelihood, and the acquisition of what his/her emotional and intellectual qualities require of him/her in an absolute sense’.2

1. Ibn Ashur, M. (2006). Treatise on Maqasid al-Shari’ah. London: The International Institute of Islamic Thought.

2. Dusuki, A. W., & Abdullah, N. I. (2007). Maqasid al-Shari’ah, Maslahah, and Corporate Social Responsibility. The American Journal of Islamic Social Sciences, 24(1), 25 - 44.

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ISFIRE REVIEW

AN ISLAMIC-BASED ENTITY THAT GAINED FUNDING (IN THE FORMS OF MONETARY AND NON-MONETARY ASSETS) FROM ISLAMIC CHARITABLE SOURCES (THROUGH WAQF, SADAQAH, HIBAH, AND QARD) AND CHANNELLED THEM INTO BUSINESSES ACTIVITIES (GOODS AND SERVICES) FOR THE PURPOSE TO CONTRIBUTE TO THE NEEDY AND AT THE SAME TIME SUSTAIN THE CONTRIBUTION IN A LONG TERM.

The concept of maslahah is further constructed into three elements of dharuriyyah (essentials), hajiyyah (complementary) and tahsiniyyah (embellishments). Al-Ghazali and extended by al-Shatibi outlined five elements under the dharuriyyah (essentials); (i) preservation of faith, (ii) preservation of life, (iii) preservation of intellect, (iv) preservation of posterity and (v) preservation of wealth. Within this context, maqasid shari’a should be viewed from a larger context by interrelating it with justice and equity through the flow of distribution of wealth among different levels of society. CONCEPTUALISING ISE

Understanding the foundation of ISE enables participant in the Islamic third sector economy and policy makers to position and expand the roles of ISE. Currently, research on ISE can be regarded as still in the infancy stage, and hence, the definition of this specific entity is still open for discussion and debate. Generally, SE can be defined as: “Primarily social objectives where its surplus are principally reinvested for that purpose in the business or in the community, rather than being driven for maximising shareholders’ wealth as in the private sector” As part of SE, ISE may adopt similar definition as SE but it has to be distinguished with additional Islamic practices embedded within the ISE. Based on the definition of SE above, which specifically focuses on the objectives, source of capital, activities, income generation and its distribution process; the definition of ISE here is: “An Islamic-based entity that gained funding (in the forms of monetary and non-monetary assets) from Islamic charitable sources (through waqf, sadaqah, hibah, and qard) and channelled them into businesses activities (goods and services) for the purpose to contribute to the needy and at the same time sustain the contribution in a long term.” Based on this definition, ISE comprises of four main elements: (i) objective of ISE as an Islamic-based entity; (ii) Islamic charitable contracts as a source of capital, (iii) activities; and (iv) income generation and distribution. This definition excludes other Islamic-based entities that directly accept charities and distribute them to the needy, without accumulating those funds.

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PRIMARILY SOCIAL OBJECTIVES WHERE ITS SURPLUS ARE PRINCIPALLY REINVESTED FOR THAT PURPOSE IN THE BUSINESS OR IN THE COMMUNITY, RATHER THAN BEING DRIVEN FOR MAXIMISING SHAREHOLDERS’ WEALTH AS IN THE PRIVATE SECTOR.

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ISFIRE REVIEW OBJECTIVES AND UNDERPINNING VALUES

ISE as an Islamic institution should be based on worship or obedience to Allah SWT and operates based on Islamic teachings. The highest attainment of ISE’s establishment is to achieve al-falah, following the objectives of the founder and other stakeholders. Islamic principles should be embedded in this organization as it should be driven by Islamic objectives. Following the essence of Islamic economics, al-falah becomes the main objective of any entity in Islam. Al-falah can be interpreted as the success in this world and hereafter. All works and efforts in this world should be directed to achieve happiness in hereafter as this world (all good deeds) is a bridge for success in the hereafter. Other principles that should be incorporated by ISE as a business legal entity are ‘adala (justice), ihsan (benevolence) and khilafah (vicegerency), which should become part of the essence of ISE.

ISE AS AN ISLAMIC INSTITUTION SHOULD BE BASED ON WORSHIP OR OBEDIENCE TO ALLAH SWT AND OPERATES BASED ON ISLAMIC TEACHINGS. THE HIGHEST ATTAINMENT OF ISE’S ESTABLISHMENT IS TO ACHIEVE AL-FALAH, FOLLOWING THE OBJECTIVES OF THE FOUNDER AND OTHER STAKEHOLDERS.

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Consistently, from the legal perspective, ISE should be directed by maqasid shari’a. The ISE serves the society by offering goods and services at affordable rates, or in certain case for free, thus enabling the poor and vulnerable households of the society to gain access to basic needs (at least at the dharuriyyah level). In the context of this article, ISE is regarded as a small economic unit that works independently in channeling the surplus from the rich to the poor, with greater flexible in its approaches. Specifically, ISE serves the donors by accepting the funds (in the form of goods and monetary funding), and channeling them to recipients via business activities for sustainability, redistribution and reinvestment purposes. Hence, ISE involves the preservation of property as well as other dimensions including the preservation of life, taking into consideration that some ISE also offers health services. SELECTION OF CHARITABLE CONTRACTS FOR ISE AS A SOURCE OF CAPITAL

Understanding the features of each charitable contracts allows us to better recognise what constitute ISE and provides a more solid definition. In addition, understanding the contracts can help participants (managers) to fulfil their obligations in dealing and managing the funds. As the basic characteristic of ISE is related to income generation, some Islamic charitable contracts are excluded from the definition of ISE. In this case, ISE is seen as a non-profit organization that collects Islamic alms such as zakat, infaq, sadaqah, and waqf while at the same time fulfils the social enterprise criteria.

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ISFIRE REVIEW

THE MAIN CHARACTERISTIC THAT DIFFERENTIATES ISE FROM OTHER TYPES OF INSTITUTIONS HAS TO BE ITS ESTABLISHMENT AS AN ECONOMIC UNIT THAT GENERATES INCOME, WHERE CAPITAL IS CONTRIBUTED THROUGH ELIGIBLE ALMSGIVING CONTRACTS. THE DISTRIBUTION OF INCOME IS MADE TO THE RECIPIENTS (DEPENDING ON THE TYPES OF CONTRACTS) AFTER DEDUCTING ALL RELEVANT EXPENSES. FOR INSTANCE, FOR ZAKAT COLLECTION, THE DISTRIBUTION SHOULD BE SPECIFIED ONLY FOR ASNAF.

Taking into consideration that these contracts have different characteristics from shari’a view point, their definitions although inclusive, are relatively conflicting with some of the contract’s requirement. For example, zakat contract requires that collections from donors be distributed to eight types of recipients post collection process. In this case, the collection cannot be kept and used by the management to generate income, thus leading to restrictions in the usage of the funds.

The distribution of income is made to the recipients (depending on the types of contracts) after deducting all relevant expenses. For instance, for zakat collection, the distribution should be specified only for asnaf. Meanwhile, for waqf-based source, the net income should be distributed to the recipients that are specifically named by the donor, except for waqf am where it is opened to all. In the case of sadaqah, on the hand, net income can be distributed to the poor and needy without any limitations.

However, waqf with its uniqueness and limitations provides huge potential to be used by ISE in the form of capital as long as the requirements on the perpetuity of the original assets are put in placed. Comparing all these contracts, sadaqah and hibah are considered as the most flexible contracts since they do not impose any limitations and restrictions in managing capital. This enables ISE to expand capital without any restrictions.

CONCLUSION

ACTIVITIES

As ISE is also involved in social business, Islamic charity funds should be managed properly and prudently on the basis of trust. Islamic charity funds can be reinvested for future benefits. Investment of funds from donors can be utilised in various business needs and activities such as trading of goods and providing services in areas that fulfil the needs of the poor and related customers. Rather than confining ISE activities within limited scope, this article includes ISE’s activities that are in line with ISE’s social business activities. As discussed above; sadaqah, waqf, qard hasan and hibah can be utilised by ISE to generate continuous income through businesses, rather than solely distributing these funds directly to recipients, due to their flexibility nature. INCOME GENERATION AND DISTRIBUTION

The main characteristic that differentiates ISE from other types of institutions has to be its establishment as an economic unit that generates income, where capital is contributed through eligible almsgiving contracts.

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ISE contributes to society in several forms. In addition to providing donors with opportunities to give in ways that reflect their interests and offer affordable goods and services to the niche segment of the society, ISE also serves the local community by creating jobs opportunities. Based on the above discussion, it is clear that ISE’s characteristics should be different from other organisations. Thus, the possible characteristics of ISE are as follows: • Based on Islamic objectives. ISE should be guided by the maqasid shari’a; • Shari’a-compliance. ISE should operate according to shari’a principles and avoid prohibited activities such as riba, gharar (uncertainty) and maysir (gambling) and prohibited goods; • Supported by Islamic charity funds. ISE can utilise Islamic charity funds such as zakat, waqf, sadaqah, hibah and qard hasan; • Run mostly by Muslims. Normally ISEs are operated by a group of Muslims. However, non-Muslim also can participate and have interest in ISE; and • Revenue generated from social business. ISE’s business conduct should be in parallel with shari’a laws and principles.

IN ESSENCE, ISE IS DIFFERENT FROM OTHER ISLAMIC NON-PROFIT ORGANIZATIONS DUE TO ITS DISTINCTIVE CHARACTERISTICS. ISE IS DISTINCTIVELY DIFFERENT FROM OTHER INSTITUTIONS DUE TO ITS WEALTH GENERATING PROPERTIES AND SUCH ISE SHOULD AIM FOR AL-FALAH AND BE GUIDED BY MAQASID SHARI’A.

MUHAMMAD IQMAL HISHAM KAMARUDDIN IS A GRADUATE FELLOW AT UNIVERSITI SAINS ISLAM MALAYSIA.

In essence, ISE is different from other Islamic non-profit organizations due to its distinctive characteristics. ISE is distinctively different from other institutions due to its wealth generating properties and such ISE should aim for al-falah and be guided by maqasid shari’a.

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ISFIRE REVIEW

TALKING POINTS

THE

“HOW-TO” OF

AND

TOUGH TALKS

CRITICAL

CONVERSATIONS HESSA AL GHURAIR

WE HAVE TO TALK… We have all heard this dreaded saying before. And when it happens in the workplace, you instantly start running through all the negative scenarios. Did I do something wrong? Am I getting fired? Learning how to have a difficult conversation at work is essential. Whether you are discussing low performance with an employee or dealing with a customer’s complaint, mastering the tough talks is a part of corporate life and corporate success. A recent study found that employees spend an average 2.8 hours a week dealing with conflict, which amounts to roughly US$359 billion in workforce costs. Even more alarmingly, a study conducted by Accenture found 35% of employees leave their jobs voluntarily because of internal politics. It’s clear that conflict conversation are unavoidable but it doesn’t mean they can’t be constructive

REFRAMING YOUR THOUGHTS An interesting study conducted in the UK found that the top four most difficult conversation in the workplace are about: pay, inappropriate behaviour, feedback on poor performance and promotions. Before entering into a critical conversation, you should be clear on what you want to accomplish, come prepared and know what the ideal outcome would be. When you are on the receiving end of a difficult conversation, try changing your mindset to be more positive.

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TALKING POINTS

SHOW COMPASSION AND DON’T CONFUSE THE FOCUS WITH “OLD HURTS” OR PLACING BLAME. YOUR OBJECTIVE SHOULD BE TO HAVE A OPEN AND HONEST CONVERSATION ABOUT AN ISSUE.

We all know the negative pit falls you can get sucked into, such as exaggerating the issues in your head, becoming defensive and passive aggressive or worrying about your likability. Even if you are the one giving the talk, you can often feel uncomfortable, nervous or upset beforehand. Both parties need to rethink how they view difficult conversations as negative and start using these experiences as an opportunity to genuinely learn something. Difficult conversations allow you to building upon your weaknesses, exercise diplomacy and express mutual respect and shared vulnerability with a colleague. If you are in the hot-seat of a critical conversation, you should focus on listening. Ensure that your follow up questions are not laced in blame or accusations. More importantly, take this an moment to reflect and learn as much as you can about your colleagues’ point of view.

PAY ATTENTION TO YOUR LANGUAGE The words you use are important. Keep it clear, simple and neutral. If you are being honest and fair, there is no reason why you can’t use positive reinforcements while delivering a difficult conversation. No one will ever win if you start using language that is excessively critical or condescending because you won’t be able to come to a resolution. Ditch your my-way-or-highway attitude. You need to listen and be open to hearing a different perspective. Keep the pace of the conversation slow to ease tension and remember if the conversation ever turns to adversarial, go back to asking questions. Lastly, you may say the right words but your body language and non-verbal communication speaks just as loudly. Gestures and expressions deliver specific messages. We have all seen that person in a meeting who crosses their arms and furrows their eyebrows when they disagree or roll their eyes or have a sly smirk when they are annoyed or think they are smarter than you. Make sure you keep eye contact, convey attention, be an active-listener and keep your facial expressions neutral. You want to make a safe and respectful environment when you are having a difficult conversation.

RESOLVE AND MOVE ON Once you both have laid your cards on the table, start working on the solution and way forward. Your approach from the start of the conversation should be to problem solve. Don’t spend too much time harping on the negative when you can focus on how you are going to fix things. Close the deal so you can move forward in the right direction in mutual understanding. At the end of the day when you are entering into a critical conversation the main objective should be keeping your relationship intact. HESSA AL GHURAIR IS CHIEF HUMAN RESOURCES OFFICER AT COMMERCIAL BANK INTERNATIONAL (CBI) & HEAD OF CORPORATE SOCIAL RESPONSIBILITY.

Most people make their best efforts to live a conflict-free life, but mastering tough talks is the difference between being unhappy and getting what you want. Overall, crucial conversations require emotional intelligence. Calm should never come at the cost of not addressing the issues. Emotional distance is a death-sentence to trust on teams. So you need to address an emotional issue with emotion. Show compassion and don’t confuse the focus with “old hurts” or placing blame. Your objective should be to have a open and honest conversation about an issue. Acknowledge the person and their feelings and direct the conversation to what matters, how both parties can work together to find a resolution and closure.

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COVER STORY

ADVANCING TECHNOLOGY IN ISLAMIC FINANCE AN INTERVIEW WITH

ESAM ALKHESHNAM CEO, INTERNATIONAL TURNKEY SYSTEMS GROUP (ITS)

The global Islamic banking and finance industry continues to go from strength to strength and is expected to experience further growth in the coming years. The Global Islamic Finance Report 2018 expects the global size of the industry to reach US$3 trillion by 2020. ISFIRE had the opportunity to speak with Esam Alkheshnam, CEO of International Turnkey Systems Group (ITS), about the new age in Islamic banking, and ITSâ&#x20AC;&#x2122;s role in supporting the industryâ&#x20AC;&#x2122;s progression.

how is fintech shaping up the islamic banking and finance industry? Fintech is revolutionising the banking landscape the same way Uber disrupted the taxi industry and Airbnb shook up the hospitality sector. In the past few years, fintech has emerged as one of the primary challengers and disruptors of the once-traditional banking industry. Within the Islamic banking and finance industry, fintech is undoubtedly the most significant driver of change in the new Islamic banking era, one that will have considerable social and economic impact across the globe. Fintech encourages financial inclusion, substantially elevate customer banking experience, and improves organisational efficiency. In the area of social development for instance, fintech has ushered in a new paradigm in the design and implementation strategies of financial inclusion. Smartphones for mobile banking and investing services are technologies that are making financial services much more accessible to the general public.

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COVER STORY

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Fintech also has the ability to break down barriers and open doors unhindered by the constraints of geography. Electronic invoicing and factoring, digital banking, smart contracts, blockchain technology, and digital authentication processes are all driving efforts toward more inclusive financial institutions in Islamic banking. But the biggest potential impact of fintech on Islamic banking and finance would be the wider outreach of Islamic financial services, especially in markets where Islamic finance has yet to evolve beyond a concept or where market penetration is still low and have yet to achieve any significant level.

how important is it for islamic

Furthermore, with half of the world’s population under 30 years of age and the number of under 35 millionaires at an all-time high, this emerging affluent segment is expected to shape product development and drive innovation in the financial services industry.

ITS is known as the industry

Banks also need to invest in innovation centres and build digital transformation strategy and roadmap for the future. Understanding that they must do more to keep up or be left behind, banks are increasingly seeking out fintech innovations that could enhance their services and maintain a competitive advantage.

financial institutions. what is ITS’s strategic focus to remain

how is

banks to digitise their operations

ITS positioning itself

to take advantage of these

in light of the digitisation wave and rise of fintech?

developments?

The fintech revolution has given rise to a variety of novel financial services and products, such as bitcoin, P2P lending, crowdfunding, mobile payment, and insurtech. These so-called disruptions have important implications for financial institutions, including Islamic banks. The ability to offer high-quality, digitised financial services may spell the difference between long-term customer retention, and becoming entirely obsolete. Hence, it is imperative for Islamic banks to embrace digitisation by using technology to improve customer experiences, enhance their products and services, and streamline core operations, thereby strengthening their position in the market.

The rapid growth and transformation of the Islamic financial services sector is demanding constant innovation from banks and financial institutions. ITS competitive edge lies in its ability to adapt to the rapidly changing needs of the industry and develop solutions that meet those needs. Our award winning ETHIX Solution is a technological advanced solution that provides support to financial institutions in their continuous quest to reach an advanced operational level, keep abreast of changing customer demands and markets, while at the same time lower operational costs and increase profitability. As a comprehensive solution, ETHIX provides multi-channel services, whether for individuals or companies, in the field of Islamic finance and investment. These include core banking system, trade finance system, advanced profit calculation engines, and digital technology solutions through the “ETHIX Digital Suite” that automate branch procedures, create Digital Branches (XTM), and offer advanced reporting, as well as a number of other distinctive products and services.

Furthermore, the pace at which digitisation is developing means that Islamic banks need to adopt an agile approach and reinvent their business model to remain competitive. But the real pressure for banks to embrace digitisation is coming directly from the consumer. More specifically, from the Millennials themselves, who are not only tech savvy but are more receptive to new ways of consuming financial services. With Millennials leading the digital banking revolution, Islamic financial services will be driven by expectations of a faster and more seamless banking experience.

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leader in the provision of

advanced technology solutions and products that are designed specifically for traditional and shari’a-compliant banks and

at the forefront of innovation and leadership in this space? are there any plans for regional expansion? Our strategic focus is on three main themes. Firstly, to continue to provide the best products and services to our customers. Secondly, to invest in the development of new, innovative products in order to maintain our market leading position, keep abreast of global technological innovations, and meet customer needs. Thirdly, to enter new and promising markets. In relation to the latter, the Group has succeeded in obtaining several contracts in these potentially lucrative markets despite the fierce competition in these markets. After the successes achieved in the markets in which we are currently operating, combined with the rapid growth of Islamic banking and finance; ITS is expanding its geographic footprint into new markets, particularly in Africa. We have already signed several key agreements with a number of banks and financial institutions where ITS has leveraged its in-depth experience and long track record of success, differentiated products, as well as expert human capital to gain competitive advantage. Aligned with our strategic focus and development strategy, we are focusing our efforts on further expansion in the Middle East, North and Central Africa region and the Caribbean. In particular, ITS is currently offering its products and services in the western region of Morocco and the Russian Commonwealth (CIS).

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can you share with us some of the new technology and product initiatives that

ITS is working on.

any new projects in the pipeline for 2019?

As part as our plan to maintain a competitive edge over other marker players, ITS is committed to providing innovative and efficient products and services solutions to our customers. Over the last two years, ITS has been awarded a number of international accolades through its digital technology solution, â&#x20AC;&#x153;ETHIX Digital Suite,â&#x20AC;? which has been adopted by more than 11 banks and financial institution in the Middle East, North and Central Africa region. Despite our many successes, we will continue to invest heavily in research and development of new and pioneering products while keeping abreast with the global technological innovations in order to meet the present and future needs of our customers. At present, we are focusing on the digital market and fintech through the adoption of new features and trends that are driving the transformation of the global Islamic financial services industry. This include native mobile development such as customer onboarding, mobile wallets, e-payments etc. We are also capitalising on virtual branch banking and adding additional features that will streamline customer experience with virtual branch, which is an ideal way to meet the evolving customer expectations. Other initiatives that we are working on includes the adoption of the blockchain technology and integrating it with ETHIX Solution through blockchain adaptors; initiating the investment of the APIs market for solutions, and tackling the cloud offering by providing ETHIX on the cloud customer segments.

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TALKING POINTS

INTEGRATING

INNOVATION

IN DEVELOPMENT

PROJECTS

NAGUIB CHOWDHURY

The highly ambitious Sustainable Development Goals are increasingly pushing development organizations to rethink their operation and business models. These solutions need to be agile, scalable, co-designed and co-created with the beneficiaries. The organizations themselves need to be highly adaptive, flexible, fast and forward-looking and only then can high impact, innovative solutions be delivered. This organizational shift is a major task for many organizations, who have been dealing with legacy systems, policies and embedded bureaucracy. Changing culture is an uphill task, especially when the workforce remains the same. Advancement of disruptive technologies bring lots of opportunities for development workers provided they know how to effectively use them. Disruptive technologies, like the blockchain, will increase the efficiency and transparency of aid work to a greater extent. Embedding new tech such as drones, social data analytics, machine learning, artificial intelligence, robotic process automation will enhance the effectiveness of development interventions in various countries. The question is how to successfully integrate them into the development project cycle? My personal experience suggests that this is not that easy, especially when people are comfortable with doing business as usual. Therefore, have perseverance. Adding a new component always adds some level of risk in its implementation. On top of that, the client may not see the value of having a new component as this may increase costs and implementation time.

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Secondly, do not try to embed an innovation that has not been tested with a positive outcome. If innovation is not tested and at a basic research level, integrating with a project will be extremely difficult due to a low level of buy-in from the management. Thirdly, have a pilot. Start implementing small innovations in not so complicated projects, measure the value and then scale up. The following image describes at what stage innovation can be integrated:

INTEGRATING INNOVATION IN DEVELOPMENT PROJECT PROJECT LIFE CYCLE

CONCEPT

PREPARATON

FORMULATION

APPRAISAL

APPROVAL

IMPLEMENTATION

INNOVATION LIFE CYCLE Understanding market trends, needs and new tested innovations Through: Horizon Scanning, Trends spotting, Research etc.

SPOTTING

INNOVATION

INTEGRATION

VIA PILOT TEST

VALUE

MEASUREMENT

SCALE UP

INTEGRATION OF INNOVATIVE SOLUTIONS CAN BE DONE AT THE CONCEPTUALIZATION STAGE OF THE PROJECT. AT THIS POINT, CALCULATE HOW MUCH EXTRA BUDGET MAY BE REQUIRED, SEEK SPONSORSHIP FOR THIS EXTRA COST AND ONCE MANAGEMENT APPROVAL IS OBTAINED, GO FOR A SMALL-SCALE IMPLEMENTATION. A SUCCESSFUL PILOT ALWAYS TRIGGERS WIDER IMPLEMENTATION. BUT FIRST, YOU MUST DEMONSTRATE THAT IT WORKS.

As shown, a lot of work needs to be done to spot an innovation opportunity. Horizon scanning, research, focus group discussions on thematic topics. Once the innovation is spotted, discuss with the relevant project officers on adding the component to the project design. Usually, any development project starts with formulating the concept, followed by preparation and appraisal. Integration of innovative solutions can be done at the conceptualization stage of the project. At this point, calculate how much extra budget may be required, seek sponsorship for this extra cost and once management approval is obtained, go for a small-scale implementation. A successful pilot always triggers wider implementation. But first, you must demonstrate that it works.

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A CASE STUDY

Two years ago, we implemented an infrastructure project with an innovation component, which increases road durability by 3 times. We had spotted three innovations from three different countries during the innovation exhibition organized at our Annual Meeting followed by identification of a prospective client — a member country in Africa. Several technical workshops were organized with government agencies at the client’s destination with all three innovators. After careful consideration, one of the innovations was considered highly relevant to the country’s need. A technical tour was organized in the innovator’s country of origin, where detailed study and observation took place. Convinced of the innovation’s impact on the road infrastructure, the project proposal was then developed, and financing was extended to the client country. It should be noted that many innovations, especially at an early stage, are not cheap. For example, robotics, drones, blockchain and AI tools are still not easily available or commercially viable. Integrating them into normal development projects might significantly increase the financing cost. One suggestion would be to look for frugal innovations that are community driven/ led and low cost. There are many low costs innovations that exist in various parts of the world, and they require nurturing and branding to be visible globally. One of the examples of a frugal innovation is, Chotukool- an affordable food storage solution designed for the lower-class households in India. The storage in a 45-liter plastic container that can cool food to around 8 to 10 degrees on a 12-volt battery. The solution uses a thermoelectric or solid state cooling system instead of the compressor technology used in domestic fridges. Designed by Godrej & Boyce Manufacturing, Chotukool improved the lives of the rural community by preserving the perishable food and allowing the small shops to sell cold drinks to their customers.1

A PRE-REQUISITE

Trying out any innovation within a ‘business as usual’ setting requires a corporate culture of risk tolerance, shared responsibilities and adaptability. An organization needs to go through a major transformation to build such a culture if it does not exist. One way could be to test out the new ideas in an incubator, which is a dedicated unit and outside of the regular business processes environment. Allocated some funding to the incubator and allow for exception and failure. So, are you ready to try something new for your next project?

NAGUIB CHOWDHURY IS A SENIOR INNOVATION SPECIALIST AT A DEVELOPMENT ORGANIZATION. HE IS AN INTRAPRENEUR WITH OVER 14 YEARS OF EXPERIENCES IN INITIATING, DESIGNING, LEADING AND DRIVING STRATEGIC PROJECTS IN COLLABORATION WITH INTERNAL AND EXTERNAL PARTNERS FOR CREATING ECONOMIC AND BRANDING VALUES OF THE ORGANIZATION.

1. Source: https://www.wipo.int/wipo_magazine/en/2013/06/ article_0003.html

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POINT OF VIEW

TEAMWORK, OWNERSHIP,

PROFESSIONALISM NORA TAHIR

eamwork from my point of view, means a bunch of people working together cohesively towards a common goal. Given a conducive setting, teamwork can produce wonders, delivering the results on timely basis and with such joy felt by all the team members. Teamwork doesn’t just happen. There is a lot of conditions to be met before anyone can dream about the happy ending. Worry not people, the conditions are not impossible to be met, in fact it could well be easier to meet it than to find the willpower to get it done. The most prevailing conditions for teamwork cover both the attitudes and behavior of the team. In the most summarized form, ‘You need trust, openness, cooperation”. Pretty brief, but it captures all the basic important ingredients one could ever need for a successful teamwork. The famous Henry Ford said, “coming together is a beginning, keeping together is progress, working together is success.”

NORA TAHIR IS THE CHIEF FINANCIAL OFFICER OF CAGAMAS BERHAD, MALAYSIA.

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POINT OF VIEW

In all of the above, teamwork exists in some form or another. It couldn’t just magically appear at the last stage. There could have been some growing pain in the teamwork spirit at the beginning stage but the team still pull it together and those who have faith ( I’d like to be positive here ) stays on and get to see the success of their labor. Successful teamwork comes with effort. Make sure each of us contribute to it, working on the approach versus the task at hand rather than one team member versus another. Not one of us can really claim to be smarter than all of us in the team. Trust me on that.

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ISFIRE REVIEW

THE SIGNIFICANCE OF

SUKUK-WAQF

FOR ECONOMIC DEVELOPMENT

ABDESSAMAD RAGHIBI

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Undoubtedly, infrastructure is necessary to enable economic growth. But as states can no longer fund large scale projects due to budget constraints, slow down in global recovery and fallen raw materials prices; difference between the infrastructure needed and the current level of actual investment is very sizeable. The current global economic turbulence has put pressure on financial policymakers to address their budgets and decrease public expenditures. The enormous need for development spending and infrastructure in the Muslim world as placed greater pressure on policy-makers and researchers to re-invent the financing arsenal of Islamic economics. Indeed, the growing need for social services which is linked to high demographic growth has largely outstripped public expenditure, and in turn created greater inequality in the Muslim communities. This problem is exacerbated by the size and scope of formal-sector financial institutions, which is typically small and concentrated. The institution of waqf can fill this gap by providing financing towards infrastructure projects. Waqf institutions have long had a vital role in the history of the Muslim world. Regarded as a dynamic institution, waqf provided considerable contribution to the development and advancement of Muslim societies. Throughout Islamic history, waqf was the provider of pure and mixed public goods. In the context of modern economy, this role is borne by the government and thus has resulted in burgeoning expenditure and rising debt. However, current waqf institution throughout the Muslim world have declined in effectiveness due to the poor management of waqf institutions, as a result of limited regulation and supervision mechanisms. Throughout the history of the Ottoman Empire, waqf played a vital role in sustaining and supporting public finances. All basic and essential public services such as infrastructure, education and health were provided through waqf. Given the enormous economic significance of waqf, the question that arises now is how can we revive the institution of waqf as a supporting tool for public finances?

MAQASID AL-SHARI’A OF WAQF IN THE ARABIC LANGUAGE, THE WORD “WAQF” (PL. AWQAF) LITERALLY MEANS TO HOLD, CONFINE, PROHIBIT, DETAIN, PREVENT, OR RESTRAIN. LEGALLY, IT MEANS “TO PROTECT SOMETHING, BY PREVENTING IT FROM BECOMING THE PROPERTY OF A THIRD PERSON”. THE CONCEPT OF WAQF HAS THE UNIQUE FEATURE OF LEGAL PROTECTION AND ECONOMIC SUSTAINABILITY. IN ISLAMIC LAW, WAQF DENOTES HOLDING CERTAIN PROPERTY AND PRESERVING IT FOR THE CONFINED BENEFIT OF CERTAIN PHILANTHROPY AND PROHIBITING ANY USE OR DISPOSITION OF IT OUTSIDE ITS SPECIFIC OBJECTIVE.

1. Kahf, M. (2007), “The role of waqf in improving the ummah welfare”, in Singapore International Waqf Conference 2007 on 6-7 March 2007, The Fullerton Hotel Singapore.

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2. Bada’i’ Al-sana’i’ lil-kassani 336/6

3. Al-charh al-saghir 106/4

In the Arabic language, the word “waqf” (pl. awqaf) literally means to hold, confine, prohibit, detain, prevent, or restrain. Legally, it means “to protect something, by preventing it from becoming the property of a third person”. The concept of waqf has the unique feature of legal protection and economic sustainability. In Islamic law, waqf denotes holding certain property and preserving it for the confined benefit of certain philanthropy and prohibiting any use or disposition of it outside its specific objective.1 Originally, the Hanafi, Hanbali and Shafi’i schools of thought state that the periodicity of waqf is to be eternal.2 However, the Maliki school allows the creation of a waqf for a limited time. The Malikis authorise a waqf restriction of one year or so for a known period to which after its achievement, the ownership returns to the owner or other.3 The debate on the periodicity of waqf becomes important when restructuring waqf-based products. It offers financial flexibility to investors with medium term investing horizon. The legal structure of waqf is based on four elements: the person or owner of the endowment (waqif), the element endowed (mawquf), the beneficiary (mawquf ‘alayh) and the form of the contract (al-sighah).

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WHEN A MAN DIES, HIS DEEDS COME TO AN END EXCEPT FOR THREE THINGS: SADAQAH JARIYAH (CEASELESS CHARITY); A KNOWLEDGE WHICH IS BENEFICIAL, OR A VIRTUOUS DESCENDANT WHO PRAYS FOR HIM (FOR THE DECEASED).

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From the maqasid al-shari’ah perspective, Sheikh Tayyeb ibn Achour listed four roles of waqf in Islam: 1. Encouraging and multiplying waqf actions as it brings public and private interest ( maslahah). For that, it is recognized by Shari’a as deeds which Divine reward is continuous after one’s death. The Messenger of Allah peace be upon Him said, “When a man dies, his deeds come to an end except for three things: Sadaqah Jariyah (ceaseless charity); a knowledge which is beneficial, or a virtuous descendant who prays for him (for the deceased).”4 2. For the waqf to be given from a clear and unhesitating conscious because it is consider as a ma’rouf and a generous act. Also, waqf is given with no expectation of an instant compensation. Therefore, the highest intention of waqif is public good and Allah’s reward. 3. Offering and providing a multitude of means by which waqf can be achieved. This objective fully falls into the first role of inciting and encouraging waqf actions. 4. Not making waqf an excuse to waste the money of heirs or debtors as it was the case during the time of jahiliyya.5 The above cited maqasid al-shari’a can be extended by analogy to cash waqf and sukukwaqf as they accomplish the same purposes of the original waqf structure. Hence, a sukukwaqf where the waqf assets are sued as part of the underlying assets can be an innovative way to finance governmental projects and infrastructure development. SUKUK-WAQF TO ADDRESS PUBLIC FINANCE DEFICIT

4. Sahih Muslim ‘an Abi-hurayra N°1631

5. Before the rise of Islam.

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Sukuk-waqf is composed of a merger of sukuk based contract and waqf. It can be defined as tradable certificate of equal monetary value that represents waqf funds and based on qaqf contracts. It offers the flexibility needed to raise considerable funds from a variety of sources. This process may be named as the democratization of waqf. The structuring of sukuk-waqf may not differ from the structure of investment sukuk in form but definitely differ in its purpose. In fact, the holder of a normal investment sukuk aims at profit maximisation based on the rule of “al-ghunmu bil ghurm”.

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However, the holder of waqf-sukuk is not driven by any lucrative considerations as he only aims at seeking Allah’s blessing and serving the public interest. Hence, funds raised through the issuance of sukuk-waqf can be used to develop Shari’a-compliant socio-economic projects. Upon completion of the specified project, it shall be declared as waqf assets upon maturity of the sukuk, and waqf beneficiaries will be able to enjoy the benefits in perpetuity. It is important to note that it should be feasible to merge other forms of financing in the case of large public projects due to insufficient fund or time pressure. Al-qard al-hassan could be one the instruments used for this purpose. When issuing a sukuk-waqf the following steps are generally followed: • Government shall specify socio-economic infrastructure projects, which includes the financial costs, a feasibility study, legal, procedural and regulatory aspects, and establishing a regulation that defines the rights and duties of the parties involved in the issuance process.6 • An independent agency or special purpose vehicle (SPV) shall be created to lead sukukwaqf projects, which shall determine the value of sukuk-waqf to be issued. • A juridical relationship shall be formed between the waqf agency that has been pointed as the wakeel by sukuk trustee and the SPV representing the sukukholders. • A nationwide campaign shall be launched to raise funds through small denominations in order to apply the “Democratization of waqf” principle. One may wonder why merge a lucrative means of raising funds (sukuk) with a charitable instrument like waqf. In fact, the market for sukuk is now maturing and soaring in the wake of interest from issuers and investors. Sukuk is now recognised as a viable alternative to mobilising medium and long term savings and investment from Islamic investors as well as providing a liquidity management tool for Islamic financial institutions. Against this backdrop, raising funds through sukuk-waqf issuance is an attractive alternative of funding and investment .

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APPLICATION OF SUKUK-WAQF

Projects based on sukuk-waqf are beginning to merge. The most important one is the initiative by ISRA to launch a social project in New Zealand based on sukuk-waqf. The project will be implemented co-jointly between Awqaf New Zealand, ISRA and Security Commission of Malaysia. The goal is to issue the world`s first waqf-sukuk worth of US$1 billion. Proceeds will be used to purchase waqf farms in order to supply millions of livestocks globally for qurbani and relief or charitable purposes. Indonesia recently launched a waqf-linked sukuk where proceeds from the sukuk-waqf will be used for social assistance, such as disaster relief efforts in areas hit by earthquakes or for public infrastructure projects. Hence, waqf can be used to address a number of socio- economic problems that impede the development of most Muslim countries.

ABDESSAMAD RAGHIBI IS A PHD CANDIDATE AT THE NATIONAL SCHOOL OF BUSINESS & MANAGEMENT AT THE IBN ZOHR UNIVERSITY. HE MAY BE CONTACTED AT ABDESSAMAD. RAGHIBI@EDU. UIZ.AC.MA

CONCLUSION

Waqf has played a tremendous role throughout the history of Muslim civilisation, particularly its contribution to the economic development of the Muslim world. In light of the decline in waqf endowments in the Muslim world, recent calls for the revival of waqf assets through the adoption of new innovative contracts of Islamic finance is a welcome development. Waqf is not a new concept. However, for it to maintain its viable role within the Muslim community, innovation coupled with technological advancements are imperative if we wish to rejuvenate waqf as well as to improve the awareness on the concept of waqf among Muslims. For this reason, sukuk-waqf seems to be a suitable instrument to mobilise funds from Muslims through a regulated and sustainable way as it combines the flexibility of sukuk and the sustainability of waqf.

INDONESIA RECENTLY LAUNCHED A WAQF-LINKED SUKUK WHERE PROCEEDS FROM THE SUKUK-WAQF WILL BE USED FOR SOCIAL ASSISTANCE, SUCH AS DISASTER RELIEF EFFORTS IN AREAS HIT BY EARTHQUAKES OR FOR PUBLIC INFRASTRUCTURE PROJECTS. HENCE, WAQF CAN BE USED TO ADDRESS A NUMBER OF SOCIO- ECONOMIC PROBLEMS THAT IMPEDE THE DEVELOPMENT OF MOST MUSLIM COUNTRIES.

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MBRID

IFLP

July 07 - July 12, 2019

WHY CAMBRIDGE ISLAMIC FINANCE LEADERSHIP PROGRAMME? The leadership programme prepares the next generation of leaders by providing them with a unique mentoring opportunities, rigorous leadership training from renowned leaders as well as industry-specific case studies in Islamic finance.

WHO SHOULD ATTEND?

The Cambridge-IFLP aims at bringing Islamic banking and finance professionals in the middle and upper middle management positions, to the prestigious University of Cambridge for a period of 5 days, with a view to offer them an opportunity to become members of the most prestigious mentoring programme in Islamic banking & finance.

SALIENT FEATURES LEADERSHIP TALK: Covers a wide range of topics including structuring and product development, human resource development and leadership. LEADERSHIP INTERVIEW: Leading personalities share their personal perspectives on leadership in this unique one-on-one interview. LEADERSHIP ACTIVITIES: Identify leadership skills and traits in a fun way. CAMBRIDGE CASES: Delegates apply their theoretical knowledge, develop team skills, and develop solution-oriented decision making SOCIAL ACTIVITIES: There will be numerous social activities, allowing the delegates to interact with each other and with mentors. These include a Garden Party, Punting, and a Leadership Walk, among many others.

http://cambridge-ifa.net/ CONTACT US AT: info@cambridge-ifa.net

POINT OF VIEW

CLOUDS OF

SUCCESS

FOR BUDDING

ENTREPRENEURS

MOHAMMED ASIF

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POINT OF VIEW As we know, behind every success story you will find someone who has made a courageous decision, So if you want it, be ready to risk it. Dreaming about starting a business is a dream shared by most of us but a dream without a plan is just a wish. The challenge arrives here! So, let us take a flight around it step by step.

01 STEP

02 STEP

THINK! DISCOVER! INVENT!

PREPARE A BUSINESS PLAN

What is a business? A business is nothing but an idea. Yes! There you go. The only person who knows best about your capabilities is ‘you’. Brainstorm the ideas for your business. Research. Create. Discover. Invent. What you are selling as your idea is entirely up to you. So first think about what you want to sell as a service or an idea and how is it different from what others are doing. The main part for a successful business is its uniqueness, i.e. thinking about what your business can deliver that other companies don’t. So, get up and do some market research.

The most challenging part lies in this section. Market research is again the key-point here because having an idea is one thing and executing it is another! Now is the time to whip your idea a bit. For this, asks yourself certain questions about your business idea. Yes! I am talking about the technique of “5Ws and H” (when, what, where, who, why and how). This is most helpful to help you understand your business better and to present your idea in front of someone (if needed). WHAT: WHAT ARE YOUR END GOALS? WHAT PRICES WOULD YOU DELIVER YOUR GOODS/SERVICES? WHAT PURPOSE WOULD YOUR BUSINESS SERVE? WHO: WHO WILL BE YOUR TARGET AUDIENCE? WHY: WHY ARE YOU STARTING THIS BUSINESS, I.E. THE PURPOSE?

MARKET RESEARCH IS AGAIN THE KEY-POINT HERE BECAUSE HAVING AN IDEA IS ONE THING AND EXECUTING IT IS ANOTHER! NOW IS THE TIME TO WHIP YOUR IDEA A BIT. FOR THIS, ASKS YOURSELF CERTAIN QUESTIONS ABOUT YOUR BUSINESS IDEA. YES! I AM TALKING ABOUT THE TECHNIQUE OF “5WS AND H” (WHEN, WHAT, WHERE, WHO, WHY AND HOW).

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WHY: WHY ARE YOU STARTING THIS BUSINESS, I.E. THE PURPOSE? WHEN: WHEN WOULD YOU WANT YOUR BUSINESS TO START? WHEN WOULD IT ACTUALLY BE ESTABLISHED I.E. THE TIME IT WOULD REQUIRE FOR THE BUSINESS TO SET UP? WHERE: WHERE WOULD YOU LIKE TO SET UP YOUR COMPANY OR SHOP ETC. (IF THERE IS ONE?) HOW: HOW WILL YOU FINANCE YOUR BUSINESS? HOW MUCH INVESTMENT DO YOU NEED TO GET STARTED? IF YOUR BUSINESS IS RELATED TO GOODS, THEN HOW WILL YOU SOURCE IT? HOW WOULD YOU GET TO KNOW ABOUT THE STATUS OF YOUR BUSINESS INITIALLY (FEEDBACK)? HOW WOULD YOU SPREAD AND GROW YOUR BUSINESS? HOW WOULD YOU LIKE TO PUBLICISE IT AND INCREASE AWARENESS ABOUT YOUR SERVICE? Answering these questions would sort up zillion things for you. Although, creating a well written outline would be much more helpful and easy for one. This is one of the most important steps in this competitive market because rather than what you’re doing, HOW you’re doing it is more important. One can even sell the same idea to same thousand people in thousand different and better ways. And who knows if you’re the lucky one!

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POINT OF VIEW

03 STEP

04 STEP

05 STEP

AGITATE YOUR WALLET!

KNOW YOUR BUSINESS LEGAL STATUS

PARTNER OR HIRE!

In this practical world, to be very honest you would not get even a penny without giving or investing something in return. But the fact is that investing the money puts the plan to work. Covering the cost could be a major challenge to start a business. If you can’t afford to drag enough from your savings, you can go for bank loans, raise funding from the crowd, or seek investments from investors or sponsors.

This is the step prior to the registration of your company and it would have an impact on how you file your taxes. You must decide if you are going to do it on your own and want to have a sole proprietorship or if you are doing it with two or more people, you can register for partnership. One may also consider forming a corporation in case one wants to separate the personal and company’s liability. The final destination of this decision would be registration of your company with the government before leading to our next step.

Now, it’s time for you to build a good team. It takes time and patience to get good people on board. The person should not only be passionate about your idea but should also be a right fit into your team. The choice of partner or hire would depend on the resources and money that you have. Choose wisely!

IN THIS PRACTICAL WORLD, TO BE VERY HONEST YOU WOULD NOT GET EVEN A PENNY WITHOUT GIVING OR INVESTING SOMETHING IN RETURN. BUT THE FACT IS THAT INVESTING THE MONEY PUTS THE PLAN TO WORK. COVERING THE COST COULD BE A MAJOR CHALLENGE TO START A BUSINESS. IF YOU CAN’T AFFORD TO DRAG ENOUGH FROM YOUR SAVINGS, YOU CAN GO FOR BANK LOANS, RAISE FUNDING FROM THE CROWD, OR SEEK INVESTMENTS FROM INVESTORS OR SPONSORS.

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POINT OF VIEW

PILOT PROGRAMMING

STEP

07 STEP

08 STEP

LET THE FIRE BE CAUGHT! PARTNER OR HIRE!

As said by Robert Allen, “There is no failure. There is only feedback”. Before investing your time, energy and money into a bigger plan; your company needs a platform to test the logistics, prove value and reveal deficiencies. For this, an organisation can test launch a product, conduct surveys; distribute questionnaires, create feedback forms, make online feedback section etc.

Spread your business. Advertise as much as you can to reach the largest number of audience. Social media is a great platform for advertising. Grab the opportunities to reach the maximum of you target audience. Create an attractive logo and tagline for your company that can help people identify your brand. Basically, growing your business requires you to understand the selling techniques, few marketing tactics and there awaits your success!

MOHAMMED ASIF IS DIRECTOR AT JAZAA FINANCIAL ADVISORY PVT. LTD IN INDIA.

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POINT OF VIEW

ISFIRE REPORT

ISLAMIC

RETAIL

BANKING

2018

AWARDS

HONOURS THE

BEST OF THE BEST IN

GLOBAL ISLAMIC RETAIL BANKING

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ISFIRE REPORT

The banking system forms the backbone of our society: from supporting those looking to start a business to those seeking to provide for their retirement, these institutions have made our financial industry what it is today. As such the Islamic Retail banking Banking Awards (IRBA) were established to ensure that the institutions, and the individuals behind them, are recognised for their hard work, dedication and commitment. Commenting on the programme, Chairman of the Awards Committee Dr. Sofiza Azmi said: “It has been a true pleasure showcasing the talent and commitment of our deserving winners since the inaugural IRBA programme was introduced in 2015.” Some of the most ground-breaking initiatives in Islamic retail banking were rewarded and celebrated at the 4th Islamic Islamic Retail Banking Awards (IRBA) 2018 was held in Dubai on November 21, 2018. This prestigious awards programme was organised and hosted by Cambridge IFA, a financial intelligence house based in the UK. The Chief Guest was former British Minister for International Development, Mr. Shahid Malik, who presented the awards to the winning institutions and individuals. Also in attendance was the founder of IRBA, Professor Humayon Dar. The glittery Awards Ceremony held at JW Marriott Marquis Hotel, Dubai and was attended by more than 200 guests with participation of Islamic retail banks from around the world.

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IRBA are a highlight of the Islamic financial industry calendar, celebrating institutions and individuals that deliver new and innovative products and services and whom have made outstanding achievements in their respective fields, contributing to the sustainability of Islamic banking and finance as a viable system within the global international financial architecture. IRBA is also the first-of-its-kind Islamic banking awards programme that celebrates excellence and best practices in Islamic retail banking at the global level. IRBA celebrate excellence and best practices in Islamic retail banking in two categories: Strongest Islamic Retail Banks and Critics’ Choice Awards. These prestigious awards honour individuals and institutions who have demonstrated great commitment and made significant contribution to the development, growth and success of Islamic retail banking. For the first award category, Strongest Islamic Retail Banks, award winners are selected based on a path breaking Islamic banking efficiency study conducted by Cambridge IFA, which ranks over 150 Islamic retail banks world-wide. Award winners in the second category, Critics’ Choice Awards, are assessed and selected by the Critics’ Choice Committee, which is a panel of independent leading Islamic banking experts from around the world.

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ISFIRE REPORT

ISLAMIC BANKS ARE CONTINUOUSLY COPING WITH COMPETITIVE PRESSURES FROM MANY QUARTERS, IN PARTICULAR CHANGES IN CONSUMER BANKING PREFERENCES. AS CUSTOMER DEMAND GEARS TOWARDS HIGHLY PERSONALISED SERVICES, ANYTIME-ANYWHERE BANKING AND DIGITAL BANKING, NEW DISRUPTIVE TECHNOLOGY SUCH AS ARTIFICIAL INTELLIGENCE, COGNITIVE ROBOTICS, AND BLOCKCHAIN ARE ENABLING SERVICES THAT WERE HISTORICALLY UNATTAINABLE.

In her welcoming remarks, Dr. Sofiza Azmi who is also CEO of Cambridge IFA said: “Islamic banks are continuously coping with competitive pressures from many quarters, in particular changes in consumer banking preferences. As customer demand gears towards highly personalised services, anytime-anywhere banking and digital banking, new disruptive technology such as Artificial Intelligence, Cognitive Robotics, and Blockchain are enabling services that were historically unattainable.” She also emphasised that with technological innovation in the financial sector a global trend, banks are realising the extent of the threats and opportunities that fintech poses, are putting in place measures to adjust to the new realities of their operating environment. Towards this end, she said that banks are reacting and innovating, finding new ways to specialize and create value for customers. “They do not see old-style branch banking and digital banking as opposites: they are trying to find the best of both worlds. All these have directly pushed many Islamic banks to achieve greater operational efficiency and place greater importance on innovation,” added Dr. Sofiza Azmi.

The evening saw more than 33 institutions and individuals being honoured for having displayed leadership and innovation in the Islamic retail banking industry. Their success indeed exemplifies the relentless pursuit of excellence and commitment to create a positive impact in the world through the shared values and principles of Islamic finance.

THEY DO NOT SEE OLD-STYLE BRANCH BANKING AND DIGITAL BANKING AS OPPOSITES: THEY ARE TRYING TO FIND THE BEST OF BOTH WORLDS. ALL THESE HAVE DIRECTLY PUSHED MANY ISLAMIC BANKS TO ACHIEVE GREATER OPERATIONAL EFFICIENCY AND PLACE GREATER IMPORTANCE ON INNOVATION.

“Our winners tonight exemplify such best practices in Islamic banking and the remarkable impact they have had on the Islamic retail banking industry. These are the best-inclass institutions and individuals in Islamic retail banking who have done the most in the past year to advance and strengthen Islamic retail banking as an industry,” she said in the closing statement.

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ISFIRE REPORT

This year DUBAI ISLAMIC BANK (DIB) top the honours after being named the Strongest Islamic Retail Bank in the World 2018. The bank also took home the title of ‘Strongest Islamic Retail Bank in the UAE’ for the fourth consecutive year along with the ‘Critics’ Choice for Most Innovative Digital Retail Bank’. The awards recognise dominance in the Islamic finance space as the largest Islamic bank in the UAE. The bank is also rapidly growing its foot-print beyond traditional borders and has established a strong presence in Indonesia, Pakistan, and East Africa. Nasser Al Awadhi, Chief of Consumer Banking at DIB said: “We are privileged and are grateful to have been recognized once again as the ‘Strongest Islamic Retail Bank’ not just in the UAE, but across the globe. This award crowns our efforts over a remarkable year in making Islamic retail banking a core component of the Islamic Banking and Finance (IBF) sector globally. By leveraging our unique offering of innovative products, exceptional services, and unparalleled expertise, we can continue to improve our clients’ experience across every facet of banking. With customer centricity being at the heart of what we do, our priorities remain focused on strengthening and establishing long-term relationships while striving to meet the ever changing needs.”

STRONGEST ISLAMIC RETAIL BANK IN THE UAE 2018: DUBAI ISLAMIC BANK

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STRONGEST ISLAMIC RETAIL BANK IN THE WORLD 2018: DUBAI ISLAMIC BANK

CRITICS’ CHOICE MOST INNOVATIVE DIGITAL RETAIL BANK 2018: DUBAI ISLAMIC BANK

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ISFIRE REPORT BANK SYARIAH MANDIRI, Indonesia swept 4 award categories which included Strongest Islamic Retail Bank in Asia 2018, Strongest Islamic Retail Bank in Indonesia 2018 and Critics’ Choice Best Brand Experience 2018. The Bank’s Director Risk and Compliance, Mr. Putu Rahwidhiyasa, was honoured as the Critics’ Choice Best CRO of the Year 2018.

STRONGEST ISLAMIC RETAIL BANK IN ASIA 2018 AND STRONGEST ISLAMIC

CRITICS’ CHOICE BEST CRO OF THE YEAR 2018:

RETAIL BANK IN INDONESIA 2018: BANK SYARIAH MANDIRI

MR. PUTU RAHWIDHIYASA, DIRECTOR RISK MANAGEMENT & COMPLIANCE, BANK SYARIAH MANDIRI

CRITICS’ CHOICE BEST BRAND EXPERIENCE 2018: BANK SYARIAH MANDIRI

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I S F I R E R E P O RT

BANK SYARIAH MANDIRI, INDONESIA SWEPT 4 AWARD CATEGORIES WHICH INCLUDED STRONGEST ISLAMIC RETAIL BANK IN ASIA 2018, STRONGEST ISLAMIC RETAIL BANK IN INDONESIA 2018 AND CRITICS’ CHOICE BEST BRAND EXPERIENCE 2018.

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ISFIRE REPORT

STRONGEST ISLAMIC RETAIL BANK IN OMAN 2018: BANK NIZWA

BANK NIZWA, Oman’s leading Islamic bank, was named the Strongest Islamic Retail Bank in the Sultanate of Oman for the fourth “consecutive year. The award recognized the bank’s efficiency in terms of operations and management of its retail banking services. In line with its strategy to empower communities with the benefits of Islamic finance, Bank Nizwa has been at the forefront of introducing progressive products and services. The award was received by Arif Al Zaabi, Assistant General Manager Retail Banking at Bank Nizwa who commented, “It’s a great achievement to win this award yet again, emphasizing the success of our journey as Oman’s first Islamic bank. This win reaffirms our successful track-record in achieving Bank Nizwa’s long-term strategy that raises awareness on Islamic finance, its products and services and associated benefits for retails customers.” He added that the bank will continue introducing and enhancing our service offering to retail customers to empower them in leading financially secure life-styles.”

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IT’S A GREAT ACHIEVEMENT TO WIN THIS AWARD YET AGAIN, EMPHASIZING THE SUCCESS OF OUR JOURNEY AS OMAN’S FIRST ISLAMIC BANK. THIS WIN REAFFIRMS OUR SUCCESSFUL TRACK-RECORD IN ACHIEVING BANK NIZWA’S LONG-TERM STRATEGY THAT RAISES AWARENESS ON ISLAMIC FINANCE, ITS PRODUCTS AND SERVICES AND ASSOCIATED BENEFITS FOR RETAILS CUSTOMERS. THE BANK WILL CONTINUE INTRODUCING AND ENHANCING OUR SERVICE OFFERING TO RETAIL CUSTOMERS TO EMPOWER THEM IN LEADING FINANCIALLY SECURE LIFESTYLES.

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ISFIRE REPORT Meanwhile, the Strongest Islamic Retail Bank in Qatar was awarded to QATAR INTERNATIONAL ISLAMIC BANK (QIIB). Commenting on the winning, Mr. Jamal Abdullah al-Jamal, Deputy CEO of QIIB, said: “We consider this award a recognition off our strong efforts in developing our retail portfolio and offering the best Shari’a-compliant products and services to our valued customers.” He added that QIIB’s excellence and quality of its integrated services have resulted in its customer base growing exponentially. “To this effect, the bank has opened many branches and introduced alter-nate channels, which have witnessed enormous development, thus contributing to meeting the requirements of customers in the easiest and most efficient way,” he explained. Other winners for the Strongest Islamic Retail Bank categories are as follows: Strongest Islamic Retail Bank in Pakistan: Dubai Islamic Bank Pakistan Strongest Islamic Retail Bank in Bangladesh: Islami Bank Bangladesh Limited Strongest Islamic Retail Bank in Turkey: Kuveyt Turk Participation Bank

STRONGEST ISLAMIC RETAIL BANK IN QATAR 2018: QATAR INTERNATIONAL ISLAMIC BANK (QIIB)

Strongest Islamic Retail Bank in Kenya: Gulf African Bank A number of Critics’ Choice Awards were also announced at the Awards Ceremony. ALINMA BANK of Saudi Arabia was chosen as the Most Innovative Retail Bank in the World 2018. Speaking about the award, Alinma Bank CEO, Mr. Abdulmohsen Al-Fares, expressed his appreciation and stressed the bank’s determination to maintain its position as a leader in the provision of modern, exemplary, Shari’a-compliant banking products and services. “Alinma Bank will continue striving to meet the needs and aspirations of Alinma partners. And thanks to the bank’s application of the latest in banking technology, and thanks to the quality and commitment of its staff, Alinma is well positioned to succeed in achieving its vision of being the preferred fi-nancial partner for all,” he added. Mr. Al-Fares was also honoured the Islamic Retail Banking Leadership Award 2018, which is the top award given to any individual at IRBA. CRITICS’ CHOICE MOST INNOVATIVE RETAIL BANK IN THE WORLD 2018: ALINMA BANK

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ISFIRE REPORT ALBARAKA TURK PARTICIPATION BANK was chosen as Critics’ Choice Best Islamic Retail Bank in Turkey for 2018. “insha marks the first step in the bank’s strategic entry into the European market. As Albaraka Türk, we are making significant investments in digitalizing our offering in accordance with our vision to become the world’s best participation bank. We are proud to have taken the first step with the insha project in Europe, home to more than 20 million Muslims. We aim to provide convenience to Turkish citizens and other Muslim communities first in Germany with a complete experience of branchf ree and digital banking services. We are very happy to see the appreciation of our efforts and honored to be receiving such a significant award. “Critics’ Choice Best Islamic Retail Bank in Turkey 2018” at IRBA,” said Mr. Meliksah Utku, General Manager and CEO, Albaraka Turk Participation Bank. Siraj Finance of the UAE was chosen to receive Critics’ Choice Best Non-Bank Islamic Retail Finance Institution. Mohamed Rusan Fyroze, General Manager of Siraj Finance was named Critics’ Choice Upcoming Personality in Islamic Retail Finance 2018.

CRITICS’ CHOICE BEST ISLAMIC RETAIL BANK IN TURKEY 2018: ALBARAKA TURK PARTICIPATION BANK

CRITICS’ CHOICE UPCOMING PERSONALITY IN ISLAMIC RETAIL FINANCE 2018: MOHAMED RUSAN FYROZE, GENERAL MANAGER OF SIRAJ FINANCE

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ISFIRE REPORT FNB Islamic Banking of South Africa was crowned the Critics’ Choice Most Trusted Islamic Retail Banking Brand (Islamic Window) while Mr. Amman Muhammad, its CEO was named as IRBA CEO of the Year 2018. “We are truly honoured to be awarded the Critic’s Choice Award as the Most Trusted Brand. An award of this nature is exceptionally impressive, especially con-sidering the challenging global financial environment that we find ourselves in,” commented Mr. Amman Muhammad. He added that in a world where the financial services industry is under scrutiny, trust becomes the cornerstone of a strong banking relationship and the foundation of all growth.

WE ARE TRULY HONOURED TO BE AWARDED THE CRITIC’S CHOICE AWARD AS THE MOST TRUSTED BRAND. AN AWARD OF THIS NATURE IS EXCEPTIONALLY IMPRESSIVE, ESPECIALLY CONSIDERING THE CHALLENGING GLOBAL FINANCIAL ENVIRONMENT THAT WE FIND OURSELVES IN. IN A WORLD WHERE THE FINANCIAL SERVICES INDUSTRY IS UNDER SCRUTINY, TRUST BECOMES THE CORNERSTONE OF A STRONG BANKING RELATIONSHIP AND THE FOUNDATION OF ALL GROWTH.

IRBA CEO OF THE YEAR 2018: AMMAN MUHAMMAD, CEO OF FNB ISLAMIC BANKING

Human Resource Development is receiving an increasing focus and attention in Islamic retail banking. As a result, the level and quality of knowledge of Islamic banking amongst the branch-level staff has improved significantly. To commemorate this new trend and encourage its further development, the Critics’ Choice Committee recommended to establish a new permanent award – IRBA Investors in People Award, which was won by ADCB Islamic Banking for Islamic Banking Academy.

TO COMMEMORATE THIS NEW TREND AND ENCOURAGE ITS FURTHER DEVELOPMENT, THE CRITICS’ CHOICE COMMITTEE RECOMMENDED TO ESTABLISH A NEW PERMANENT AWARD – IRBA INVESTORS IN PEOPLE AWARD, WHICH WAS WON BY ADCB ISLAMIC BANKING FOR ISLAMIC BANKING ACADEMY.

IRBA INVESTORS IN PEOPLE AWARD 2018: ADCB ISLAMIC BANKING FOR ISLAMIC BANKING ACADEMY

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Bank Aljazira celebrated a double win when the bank was announced as recipient for the Critics’ Choice for Best Islamic Digital Banking 2018 and Critics’ Choice for Best Islamic Retail Banking Innovation Awards 2018. Khalid AlOthman, Senior Vice President and Head of Retail Banking Group of Bank Aljazira, said “this new success highlights the bank’s leadership in the Shari’a-compliant Islamic retail banking and reflects the bank’s excellence in retail banking innovation, particularly in the light of rapid technological evolution under the digital transformation umbrella in Saudi Arabia.” He added that “we are continuing our steps of excellence in the retail banking field by launching various programs, latest of which was the “Online Account Opening” through the bank’s website, and without the need to visit any of the bank’s branches by utilizing “Qubol” service from Absher for authentication.” Recognised for its excellent Electronic Banking channels, including Aljazira Smart, Aljazira Online and the award winning Aljazira Phone, the bank has launched a number of new services and expanded its money transfer service “Fawri”. CRITICS’ CHOICE BEST ISLAMIC DIGITAL BANK 2018: BANK ALJAZIRA

THIS NEW SUCCESS HIGHLIGHTS THE BANK’S LEADERSHIP IN THE SHARI’A-COMPLIANT ISLAMIC RETAIL BANKING AND REFLECTS THE BANK’S EXCELLENCE IN RETAIL BANKING INNOVATION, PARTICULARLY IN THE LIGHT OF RAPID TECHNOLOGICAL EVOLUTION UNDER THE DIGITAL TRANSFORMATION UMBRELLA IN SAUDI ARABIA. WE ARE CONTINUING OUR STEPS OF EXCELLENCE IN THE RETAIL BANKING FIELD BY LAUNCHING VARIOUS PROGRAMS, LATEST OF WHICH WAS THE “ONLINE ACCOUNT OPENING” THROUGH THE BANK’S WEBSITE, AND WITHOUT THE NEED TO VISIT ANY OF THE BANK’S BRANCHES BY UTILIZING “QUBOL” SERVICE FROM ABSHER FOR AUTHENTICATION.

CRITICS’ CHOICE BEST ISLAMIC RETAIL BANKING INNOVATION AWARD 2018: BANK ALJAZIRA

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“It is often said that hard work and dedication are the beddrock of every great achievement. These are the virtues that guide the Gulf African Bank Family which lifts us excel in all we do. This recognition goes a long way in cementing our position as a well-capitalized commercial bank that is the ultimate financial gateway to any investor seeking to invest in the East African region. I’m also elated to be the recipient of Critics’ Choice Most Promising Leader in Islamic Retail Banking 2018.” - Mr. Abdalla Abdulkhalik, Managing Director, Gulf African Bank CRITICS’ CHOICE MOST PROMISING LEADER IN ISLAMIC RETAIL BANKING 2018: MR. ABDALLA ABDULKHALIK, CEO OF GULF AFRICAN BANK

IRBA PERSONALITY OF THE YEAR 2018: DR. ALI ADNAN IBRAHIM,

CRITICS’ CHOICE BEST ISLAMIC SAVINGS PRODUCT 2018: NATIONAL

GLOBAL HEAD OF SUSTAINABILITY AND SOCIAL RESPONSIBILITY,

BONDS

ALBARAKA BANKING GROUP

“Islami Bank Bangladesh Limited would like to extend its warmest gratitude and solicitation to Cambridge IFA. Indeed, It is a matter of great pleasure on our part to be nominated and selected for winning ‘Best Emerging CEO in Islamic Retail Banking 2018’ by Cambridge IFA. I heartily express my sincere thanks and gratitude for the efforts and initiatives of Cambridge IFA for the grand program. I trust and believe that this award and recognition will encourage us in stepping on to the stairs of more success in multidimensional parameters considered for the evaluation of Banks in days to come. With highest respect and best wishes.” - Mr. Md. Mahbub ul Alam, Managing Director and CEO, Islami Bank Bangladesh Limited CRITICS’ CHOICE BEST EMERGING CEO IN ISLAMIC RETAIL BANKING 2018: MD. MAHBUB UL ALAM, CEO OF ISLAMI BANK BANGLADESH LIMITED

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Other award winners included under the Critics’ Choice were: Critics’ Choice Best Islamic Retail Banking Brand in Pakistan: Dubai Islamic Bank Pakistan Critics’ Choice Best Bank for Financial Inclusion: BTPN Syariah Critics’ Choice Best Digital Banking Initiative: insha by Albaraka Turk Participation Bank Critics’ Choice Best Islamic Products: National Bonds

Savings

Critics’ Choice Best Performing Musharaka based SME Product: Musharaka Partnership Model developed by MIT Global

ESAM ALKHESHNAM CHIEF EXECUTIVE OFFICER AT INTERNATIONAL TURNKEY SYSTEMS (ITS)

IT IS AN HONOUR TO BE AWARDED THE CRITICS’ CHOICE “BEST DIGITAL BANKING SOLUTION’ FROM IRBA. THIS AWARD IS A TESTIMONY TO OUR CONTINUED SUCCESS IN DELIVERING ON THE COMMITMENT AND TO CONTINUE EMPOWERING BANKS AND FINANCIAL INSTITUTIONS TO SUCCEED IN TODAY’S DIGITAL BANKING AGE. THE ETHIX DIGITAL SUITE DELIVERS NEXT GENERATION ONLINE BANKING SERVICES TO CORPORATE AND RETAIL BANKING CUSTOMERS AND PROVIDES FINANCIAL INSTITUTIONS WITH COMPETITIVE ADVANTAGE.

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International Turnkey Systems Group (ITS), a key player in the provision of advanced financial technology solutions (FinTech) and services, was named the winner of the Critics’ Choice Best Digital Banking Solution 2018 for its innovative ‘ETHIX’ product range. The award was received by Mr. Esam Alkheshnam, Chief Executive Officer of International Turnkey Systems Group (ITS). Commenting on the win, Mr. Esam Alkheshnam said: “It is an honour to be awarded the Critics’ Choice “Best Digital Banking Solution’ from IRBA. This award is a testimony to our continued success in delivering on the commitment and to continue empowering banks and financial institutions to succeed in today’s digital banking age”. He added: “The ETHIX Digital Suite delivers next generation online banking services to corporate and retail banking customers and provides financial institutions with competitive advantage.”

Several individuals were also hounured during the gala dinner. They included Mr. Abdalla Abdulkhalik, CEO of Gulf African Bank, for Critics’ Choice Most Promising Leader in Islamic Retail Banking; Mr. Mohammed Ibraheem Khan, founder of OneGram, for CEO of IRBA Fintech Leader of the Year; Dr. Ali Adnan Ibrahim, Global Head of Sustainability and Social Responsibility at the Al Baraka Banking, for IRBA Personality of the Year and Md. Mahbub ul Alam, CEO of Islami Bank Bangladesh Limited, for Best Emerging CEO in Islamic Retail Banking. The gala dinner also included an interview with Mr. Amman Muhammad, CEO of FNB Islamic Banking, who shared his journey to becoming the IRBA CEO of the Year 2018. “Being recognised by the IRBA Awards Committee as the 2018 CEO of the Year truly humbles me. Many years have been dedicated in driving the recognition of Islamic banking as a credible banking alternate, after years of continued campaigning we witness robust growth and are now acknowledged as a credible niche banking option,” shared Mr. Amman Muhammad. He further added that the bank will continue to drive innovation and incorporate cutting edge technology in the provision of a world-class Islamic banking value proposition to our customers.

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“It is with deep appreciation that I accept this award and I am extremely honored that IRBA has once again noticed the hard work that we do in the OneGram project and the Islamic FinTech space as a whole. Recognizing our efforts pushes Islamic FinTech further and it benefits not only the OneGram community, but the whole Islamic Finance industry. It is continuing to be a very exciting journey for myself and my team as we endeavor to push for more innovations that we hope will make their mark in the history of Islamic FinTech. Thank you IRBA for according me with the IRBA Fintech Leader of the Year 2018 award!” - Mr. Mohammed Ibrahim Khan, CEO, GoldGuard IRBA FINTECH LEADER OF THE YEAR 2018: MR. MOHAMMED IBRAHEEM KHAN, FOUNDER OF ONEGRAM

STRONGEST ISLAMIC RETAIL BANK IN TURKEY 2018:

CRITICS’ CHOICE BEST BANK FOR FINANCIAL INCLUSION 2018:

KUVEYT TURK PARTICIPATION BANK

BTPN SYARIAH

STRONGEST ISLAMIC RETAIL BANK IN PAKISTAN 2018:

CRITICS’ CHOICE BEST PERFORMING MUSHARAKA-BASED SME

DUBAI ISLAMIC BANK PAKISTAN

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I S F I R E R E P O RT

PRODUCT 2018: MUSHARAKA PARTNERSHIP MODEL(MPM)

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ISFIRE REPORT

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I S F I R E R E P O RT

MBRID

ISFIRE PERSONALITY

IFLP

Cambridge-IFLP Alumni

NASHA PHEDRA AMIN

Director, Regional Head of Islamic Legal, CIMB Islamic WHAT WAS YOUR EARLIEST AMBITION? I’ve had so many ambitions when I was young. During my primary school years, I wanted to be a fashion designer or an airline stewardess. I had planned to go for an air stewardess interview with Malaysia Airlines after completing my national exams. But my father was against it as he wanted me to further my studies. With that, I had to shelve this ambition.

WHAT ARE YOU PASSIONATE ABOUT? I am passionate about the well-being of my family, the contributions I can make at work and on being an alpha woman.

I consider myself fortunate to have Rafe Haneef as a champion of my career growth.

WHAT ARE YOU MOST PROUD OF IN YOUR CAREER? When I first joined HSBC Amanah, I was the only one in the legal department serving the Amanah bank for Wholesale and Commercial banking line of business. From my very first day, there was no one to guide me or show me the way. I had to learn the ropes on my own. But I did survived and managed to hold the fort intact. Now when I look back at how I struggled then and the battle scars I have earned, I am proud of the obstacles I have overcome during my 2 years stint there. That experience definitely has made me a stronger person.

WHO HAS BEEN YOUR GREATEST MENTOR?

WHAT DO YOU DO WHEN YOU ARE NOT WORKING?

My boss, Rafe Haneef. He is not only a very knowledgeable person; but has a heart full of compassion, ears ready to listen and hands willing to help others. Most important of all, he is humble and treats everyone equally. He saw the potential in me when I didn’t see it myself. He took a chance by giving me opportunities, trusted me and helped me through. He is an excellent role model for how a leader should be and I was blessed to have been able to work with and learn from him. I wouldn’t be where I am today had he not believed in me.

I spend time with my boys, i.e. my husband and my three sons, visit my mom, go out for coffee with my friends, and entertain guests at home. I also cook, bake, do gardening, read, watch Korean dramas, browse Facebook, Instagram as well chatting on WhatsApp.

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I S F I R E P E R S O NA L I T Y

WHAT HAS BEEN THE MOST SATISFYING MOMENT IN YOUR LIFE? It has to be when I attended the Islamic

Finance Leadership Program at the University of Cambridge. I learned so much and had the opportunity to meet acclaimed leaders in Islamic finance who shared their knowledge and experience. I also made so many friends all over the world and we still keep in touch until today. I would never have imagined being able to attend such programme and to be able to experience being in the prestigious University of Cambridge.

IN ONE WORD, DESCRIBE YOURSELF. Self-reliant.

WHAT IS YOUR FAVOURITE QUOTE AND WHY? “With every difficulty, there is relief”. This is a verse from Surah Al-Inshirah, and the equivalent English quote is “There’s always light at the end of the tunnel”. This is something my mother used to tell me when I was young, which I have lived by throughout my life. This verse gives a message of hope and encouragement in times of adversity. It is the glad tidings that come with the Promise of Allah that enlighten the heart. Thus, we should always avoid negative outlook, and be hopeful of better results ahead. Compared to Allah’s Mercy; all our troubles, difficulties, problems and challenges are minute and tiny. There is always a solution for any problems that we face.

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IF YOU COULD GO BACK AND GIVE YOUR 21-YEAR OLD SELF A VALUABLE PIECE OF ADVICE, WHAT WOULD YOU SAY? I would have advised myself to stay back in Australia after I graduated and work there for a few years to gain experience before coming back to Malaysia. My next advice to myself at that time would be to start saving with ASB1 from my first pay check. I just found out that a friend of mine did that and she is a millionaire now!

WHAT DRIVES YOU IN YOUR PROFESSIONAL LIFE? Help grow Islamic finance, promote greater customer awareness and the use of of Islamic financial products in any way I can, be it either at making the documents customer friendly or less complicated with easier process flows. I am also driven by a sense of accomplishment after completing a challenging project or task and assisting business to achieve their targets.

IF YOU RETIRE TOMORROW AND WANTED TO START A DIFFERENT SECOND CAREER, WHAT WOULD YOU DO? Definitely an event manager. I love being creative and I enjoy events/parties and working with people. I especially enjoy hosting and organising parties right from assembling gift bags, to doing the decorations, and preparing food. Itâ&#x20AC;&#x2122;s like having an idea and making it come to life.

1. Amamah Saham Bumiputra or ASB is an income equity fund with a fixed price per unit at RM1.00 and it is one of the few funds that offers a capital guarantee.

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IF YOU COULD MEET A FAMOUS PERSON/LEADER/CELEBRITY, WHO WOULD HE BE AND WHY? I would like to meet Aisha R.A., one of the wives of Prophet Muhammad SAW. Aisha was known for her intelligence with a brilliant mind. The love between the Prophet SAW and Aisha is the best love story ever. She loved, respected and honoured the Prophet (SAW). She was once accused by hypocrites of immorality, but did not allow the slander against her colour her judgment and continued to treat that person with due honour and esteem. What inspired me was her perseverance and magnanimity. Aisha (RA) showed that education and knowledge is the foundation of success. At the time of her death, she was an expert in interpretation of the Quran, commentary of the Quran, hadith, and jurisprudence.

YOU ARE AN ALUMNI OF THE CAMBRIDGE ISLAMIC FINANCE LEADERSHIP PROGRAMME. HOW WAS YOUR EXPERIENCE ATTENDING THE PROGRAMME? The programme has provided all of us with an excellent networking platform with finance practitioners and influential leaders in the Islamic finance from all over the world. We also benefitted tremendously from the leadership talks, interviews, activities, cases and workshops and gained great first-hand insights into leadership values. The case studies gave us an understanding of real life issues whilst the social activities were fun and enjoyable. The programme also gave us the opportunity to experience Cambridge life to the fullest. Being at the University of Cambridge itself inspired us in so many ways. Not forgetting the food! They were superb and I can still taste the mouth-watering Iranian Kebabs!

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I S F I R E P E R S O NA L I T Y

PERSPECTIVES

CHALLENGING

2018,

HOPEFUL

2019

2018

was a challenging year with slow growth as the new normal. In a number of core markets, natural slow-down is due to maturity of the Islamic financial services industry. Higher transaction costs still remains a major unresolved issues facing the industry. Islamic finance continues to face perception gap issues due to rising scepticism among customers that Islamic banking and finance is actually living up to its Shariâ&#x20AC;&#x2122;a values.

However, the Islamic finance industry made significant progress at the international front. The International Monetary Fund (IMF) approved a proposal to incorporate Islamic finance into its financial sector assessments of select countries starting from January this year. The endorsement on the use of the Core Principles for Islamic Finance Regulation (CPIFR), underscores the importance and recognition of the growth of Islamic financing globally. 2018 also witnessed some innovative deals including the government of Indonesiaâ&#x20AC;&#x2122;s green sukuk, the first to be issued by a sovereign Despite its universal value proposition, the industry has yet to reach its true potential. Financial inclusion continues to be a challenge in many markets, SMEs continue to be under served by Islamic banks, and many Islamic banks still continue to struggle for scale and financial stability. In addition, with the advent of FinTech and other disruptive trends, the industry faces even more challenges on the horizon. The current challenge is to take the industry to its next stage of development and reinforce the robustness of the industry in a more challenging and dynamic socio-economic environment. Of importance in this respect, is the need to further build and advance the key strengths of Islamic finance as well as enhancing institutional capacity in the industry.

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ISFIRE ASKED LEADING PROFESSIONALS IN ISLAMIC FINANCE TO SHARE THEIR THOUGHTS ON THE DEVELOPMENT OF THE ISLAMIC FINANCIAL SERVICES INDUSTRY IN 2018 AND WHAT ARE THE MAJOR CHALLENGES THEY FORESEE FOR THE INDUSTRY IN 2019. THIS IS WHAT THEY HAD TO SAY.

PROFESSOR HUMAYON DAR DIRECTOR GENERAL, CAMBRIDGE INSTITUTE OF ISLAMIC FINANCE, UK As an advocate of Islamic finance, who has defended the industry in my multiple roles - as a Shari’a advisor, as a producer of Islamic financial intelligence, and as a practitioner - I cannot afford to criticise Islamic finance too much. However, with every passing year, while the industry continues to achieve more and more in terms of quantitative targets, the qualitative aspect of Islamic finance continues to be compromised. 2018 has been just another dot on this continuum of the trend. Islamic finance has improved on technical grounds - Murabaha, for example is a tighter transaction everywhere it is being practised, Tawarruq is more organised, and Sukuk are better-looking bonds. On individual level, the likes of Dubai Islamic Bank on a global level and Meezan Bank in its jurisdiction – Pakistan – are being considered market leaders. We have new centres of excellence emerging in various jurisdiction, e.g., Astana International Financial Centre (AIFC) and the National Committee for Shariah Finance (KNKS) in Indonesia, with focus on developing Islamic banking and finance. These are all encouraging developments. The industry continues to grow, with the global size of US$2.591 trillion at the end of the year (Global Islamic Finance Report 2019, forthcoming), and new markets (especially in Africa) are gearing up to embrace Islamic banking and finance with new regulations, new players and new products. If we look at the numbers only, the preceding year was not bad at all. 2019 is being perceived to be better – a lot better – than the past year. There are a number of challenges the industry has been facing and will continue to face in the new year. Adoption of technology is an opportunity for Islamic finance to combat a number of challenges. Shari’a authenticity, for example, can greatly be improved by adopting modern technologies like Blockchain. Innovation for the benefit of financial inclusion is another area that technology can greatly assist. Perhaps the biggest opportunity for Islamic finance is in terms of committing itself to the Sustainable Development Goals (SDGs) as developed by United Nations Development Program (UNDP) and advocated by all the multilateral development institutions and an increasing number of governments from all over the world. This will allow the industry to be seen as more socially responsible. More importantly, there is a large amount of funds available for research and development and other similar activities, which can be tapped by Islamic financial institutions, especially the ones that are small in size, to develop Shari’a-compliant and socially responsible products. It is perhaps the time for Islamic banking and finance to start partnering with development institutions, and gradually dilute its link with the market-oriented capitalist players. It will also be a good idea to start re-looking at the modus operandi of Islamic finance. So far, Islamic banking has dominated Islamic finance, with other non-bank Islamic financial institutions having only limited success and, hence, meagre shares in the global Islamic financial assets. Through technology, Islamic finance can be developed more outside the banking sector, in such a way that it may be used to achieve the SDGs.

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PERSPECTIVES DR HYLMUN IZHAR SENIOR RESEARCH ECONOMIST, ISLAMIC DEVELOPMENT BANK The industrialisation of Islamic finance has undergone ‘a four-stage evolution’ that is composed of four distinct phases: 1) the early years (1975-1991); 2) the era of globalization (1991-2001);3) the post-September 11, 2001 period; and 4) an era after the 2008 global financial crisis. We are at the early stage of the fifth (5th) phase, namely the “Digital Economy era” or “Smart Economy” as some would prefer to call it; that is associated with the following “catchphrases”: fin-tech, bitcoin and block-chain based products, crowd funding, and impact investing. The shift from mere banking and finance to the broader Halal Economy is also fascinating in that it has not only expanded the size of opportunity manifold; it also proposes to create a link between Islamic finance and the real economy. The trends of innovation going forward appear to be shifting to more socio-economic friendly financial instruments by combining commercial proposition with financial and social inclusion impact. As such, the inevitable cohesion between commercial institutions and socially driven institutions and platforms such as zakat, waqf, microfinance, SRI and crowdfunding found its momentum. This can also be seen as a strategy of Islamic finance to continuously expand and targeting new territories and reaching out to new set of clients or customers. It is rather understandable due to both push and pulls factors. Where on one side; a need is being felt to respond to the criticism that Islamic finance has failed to deliver its promises on fairness, equity and inclusion; there is also a genuine demand and opportunity and also to redirect innovation towards services and products that can create more economic opportunities, jobs and financial inclusion for those who have been on the periphery of Islamic finance. As the world currently signs up to the Sustainable Development Goals (SDGs); Islamic finance cannot afford to miss the momentum to prove that it can be part of the process of achieving some of its goals in a meaningful manner, such as poverty eradication and reduced inequalities. This will consequently reinforce the universality of Islamic finance’s value proposition as an ethical, socially responsible and fair system of finance not just for Muslims but for the whole world.

AZLEENA IDRIS GENERAL COUNSEL - HEAD OF LEGAL AND ACTING HEAD OF COMPLIANCE, KUWAIT FINANCE HOUSE (MALAYSIA) BERHAD CHARTERED PROFESSIONAL IN ISLAMIC FINANCE Allow me to share my wish for Islamic finance in 2019, especially in Malaysia. Malaysia made history last year by electing a new government without any bloodshed. We should be proud. We are now seeing a more connected public sector. P2P and crowdfunding is formally entering mainstream finance to address social needs like affordable housing. Rent to own schemes are beginning to be introduced. Homegrown participants of sharing economy are now growing regionally. A 2-year old Malaysian start-up that offers microsavings solutions based on gold has won a world award. Gig or freelance economy is increasingly becoming a popular choice particularly by fresh graduates and professionals displaced due to economic situation such that Employees Provident Fund is studying its implications on retirement planning. Homemakers, students, retirees and those previously immobile are now engaging in micro-entrepreneurship as sellers on online marketplace platforms. There is also Industry 4.0. These are not just in Malaysia. It’s worldwide. All thanks to technology. Why isn’t Islamic financial institutions prominent in all of this? Shouldn’t we collectively strategise to future proof ourselves to stay relevant??

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DR. BAKER AHMAD ALSERHAN PRESIDENT, INTERNATIONAL ISLAMIC MARKETING ASSOCIATION AND EDITOR IN CHIEF FOR INTERNATIONAL JOURNAL OF ISLAMIC MARKETING AND BRANDING In 2018 the Islamic finance industry continued its march with a growth rate beating almost all other industries. Despite of this growth though, the industry still travels with a heavy load of factors that prevent it from achieving the rightful growth rate and market penetration it deserves. Three main factors stand out among others; image, innovation, and Fiqh. First is its image as a profit making industry disguised with an Islamic ‘cloak’. This has resulted in making devout people feel they are forced to deal with institutions in this industry due to the inexistent of ‘true’ Islamic finance industry that pursues a triple bottom line instead of profit only. Second is the challenge in innovation and the introduction of new Islamic financial instruments. Islamic finance institutions appear to be either stuck with millennia old instruments, or suffer from the copy\paste effect, i.e. the copying and ‘Islamization’ of traditional financial instruments, which adds to the credibility issue of these institutions. Thirdly, advances in technology are presenting a do-or-die challenge for the Islamic financial industry as a whole. These advances are technologically complex and expensive to implement, with Blockchain at the forefront of these technologies. The new instruments and technologies are creating a rather unique situation; and Islamic Fiqh is not being developed fast enough to catch up with the changes due. The pace at which technology is advancing is creating a massive pressure on scholars to keep up. These challenges are not expected to ease within the foreseeable future.

JHORDY KASHOOGIE NAZAR ISLAMIC FINANCE PROFESSIONAL Normalisation of monetary policy in the advanced countries indirectly impacted the global Islamic finance development in 2018 as indicated by the slower growth of Islamic banks’ assets and also the sukuk issuance. Despite the slower growth in the new normal era, Islamic finance development in 2018 has been supported by the tremendous development of halal industry in major Muslim countries as well as Islamic social finance development covering zakat and awqaf development. The Islamic social finance development has remarkably been shown by the presence of Zakat Core Principles (ZCP) and Waqf Core Principles (WCP) launched by Bank Indonesia and IRTI-IDB along with zakat and waqf authorities in Muslim countries for governance enhancement. The challenge ahead for the Islamic finance industry is on how the Islamic finance industry can be mainstreamed into national policy development to have greater impacts on the socio-economic welfare of the economy that is in line with the Sustainable Development Goals (SDGs). Besides, the achievement of the greater standardisation endorsed by the mainstream international regulatory bodies is pertinent such as IMF, BCBS in order to have the impact on economic development and financial system stability.

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MUHAMMAD AIMAN MOHAMAD SALMI CPIF DIRECTOR/PRINCIPAL CONSULTANT, TAWAFUQ CONSULTANCY SDN BHD 30 years ago, Alvin Toffler wrote that “the illiterate of the 21st Century are not those who cannot read and write but those who cannot learn, unlearn, and relearn”. Currently, with strong adoption of Industrial Revolution 4.0, Society 5.0, Sustainable Development Goals (SDGs), Value-based Intermediation (VBI), and the shift from Knowledge Economy to Sharing Economy; Islamic finance is now challenged to demonstrate that it stands the test of time, and is remains relevant to humanity as it addresses the real concern of sustainable and impactful economic development. In 2019 and in the years to come, I wish to see Islamic finance intensifying its leverage on the network of intelligence to catalyse and advance the learning, unlearning, and relearning (LUR) process in a liberalised, dynamic, and borderless fashion where previously one would normally undergo a long rigorous and strict training process via an apprenticeship with a senior. I firmly believe that LUR in this era shall no longer be strictly structured, one-way or one-path. Instead, the LUR is purely based on common needs, interest, and of a symbiosis relationship. Through co- working space facilitation, it is aspired in seeing knowledge sharing and co-working culture that works beyond a limited area of the economy, moreover it creates value-based economy through engagements, communication, and sharing of experience.

AMIR ALFATAKH YUSOF ISLAMIC BANKING PRACTITIONER WRITER, ISLAMIC BANKERS RESOURCE CENTRE WEBSITE

Of the many discussions held in 2018, I am most attracted to topics of embedding Maqasid Shariah (Objectives of the Shariah) where greater importance of intentions are discussed, instead of just focusing on Shari’a-compliance and operational processes. While Islamic banking and finance was traditionally built from conventional banking practices, scholars and practitioners are beginning to demand a move into an Islamic banking model that emphasise on more substance than form. Value Based Intermediation (VBI), which takes into consideration the Maqasid Shariah, is a vision that Bank Negara Malaysia wants the industry to adopt, but rifled with challenges. It requires a shift from regular banking into sustainable banking consistent with the SDGs and ESGs while not overlapping into existing CSR space. Calls were also made to include wider economic elements such as waqf, takaful and zakat; but there is lack of political willpower to holistically include these as part of a larger connected Islamic economy. I believe these will remain challenges for the industry in 2019. An enhanced value proposition for Islamic banking and finance must be found. The industry must decide to either remain a mere replication of existing conventional banking offerings, or detach itself to redesign as a real alternative financial solution with greater objectives and intentions. Revolution 4.0 has started, thus giving Islamic banking and finance the rare opportunity to re-evaluate its space in the new economy. Can the industry start a new conversation that includes VBI, waqf, fintech, equity ventures, profit sharing, digital contracts and mobile banking? I acknowledge it will take tremendous energy but if not now, then when?

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SULAIMAN ALBASSAM SENIOR MANAGER, FINANCE DIVISION, INTERNAL CONTROL DEPARTMENT, AHLI UNITED BANK In the aftermath of the global financial crisis, Islamic finance have proven to be inherently more stable and resilient than conventional finance. The inherent principles of Islamic finance in which financial transactions must be underpinned by real economic activities and structured on strong ethical precepts, ensures its close linkage to the economy as it directs the overall intermediation function towards economic production and wealth creation. Outlook stays bright for Islamic finance in 2019, but challenges remain. Despite the significant strides the industry have had over the years, Islamic finance is said to be stuck in third gear. For example, lack of product innovation and shortage of adequately trained and skilled resources have constrained growth. Islamic banks still continue to face challenges on the liquidity management front due to lack of a comprehensive Islamic interbank money market. Lack of instruments, non-standard documents and processes, and counterparty or credit risk are issues that need to be resolved by Islamic money market. Another complex issue that has emerged is the dilemmatic position of Islamic finance institutions in retaining its distinct Shariâ&#x20AC;&#x2122;a principles, while attempting to be part of the global financial system through adopting the IFRS.

MOHSIN SHAIK SEHU MUHAMMAD HEAD, INVESTMENT BANKING & CAPITAL MARKETS, MAISARAH ISLAMIC, BANK DHOFAR 2018 has been an interesting year. As the political environment and the volatility of the oil price has created cautious feelings in the Islamic finance society. However, we have seen positive growth regardless of all the challenges in 2018. 2019 will yet be another interesting year. Oil prices will be the main factor for the development of Islamic finance especially in the GCC market. A lot of projects are planned to be executed as part of the diversification plan by the oil relied economy. Therefore, expectation on deals in relation to Islamic finance will be positive. Sukuk, Real estate funds and commercial banking assets may be growing by tapping this opportunities. As such, we can only see an upwards in Islamic finance and we hope more innovative structures and instruments will be introduced in 2019.

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MADINA TUKULOVA AIFC ISLAMIC FINANCE DEPARTMENT, KAZAKHSTAN Kazakhstan has been in the frontier leading Islamic finance development in the Central Asian region. As a pioneer in the introduction of Islamic finance in Central Asia region, Kazakhstan has taken important steps to promote the industry through a roadmap that embraces the adoption of supportive legislation and institutions covering the Islamic banking, capital markets and investment funds sectors. Islamic finance industry in the region has entered a new stage with the establishment of the Astana International Financial Centre (AIFC), an international financial hub created in Astana, Kazakhstan; to promote international finance including Islamic finance. One of the aims of AIFC is to promote Islamic financial services in the region in accordance with best international practices. In 2018, AIFC adopted its legal framework. AIFC legal framework offers serious flexibility compared to Islamic finance regulation existing in the rest of the region. AIFC legal framework has not been tested, and one of the challenges is to demonstrate to major international players and the rest of the world that AIFC is an attractive place to invest. We also aim to demonstrate that AIFC offers world class regulation of the financial market. One of our targets for next year is to attract major international players in Islamic banking and takaful. We are now working on issuance of the first sukuk within AIFC. We are very optimistic about the impact of AIFC on the Islamic finance industry in the region.

HASSAN WAQAR FOUNDER AND CHIEF EXECUTIVE OFFICER, MONEEMINT Islamic finance has really picked up in 2018, and this trend is really going gather pace in 2019 especially in the Islamic fintech space. Many countries in the Middle East such as the UAE and Bahrain are encouraging Islamic fintech to thrive and grow and this is also seeing an upward trend in the UK. As we are aware, the UK regulated the first Shari’a-compliant crowdfunding platform Yielders and there are many various fintechs in the Islamic finance space that are popping up in London including the UK’s first digital ethical bank MoneeMint, which is expected to be launched in the first half of 2019. However, the race is still on, and investors should really look at the US$2.4 trillion market to invest their money in whether it’s the property market or banking. One thing I have noticed in the Western world is the willingness to work with Islamic fintech.

KAZAKHSTAN HAS BEEN IN THE FRONTIER LEADING ISLAMIC FINANCE DEVELOPMENT IN THE CENTRAL ASIAN REGION. AS A PIONEER IN THE INTRODUCTION OF ISLAMIC FINANCE IN CENTRAL ASIA REGION, KAZAKHSTAN HAS TAKEN IMPORTANT STEPS TO PROMOTE THE INDUSTRY THROUGH A ROADMAP THAT EMBRACES THE ADOPTION OF SUPPORTIVE LEGISLATION AND INSTITUTIONS COVERING THE ISLAMIC BANKING, CAPITAL MARKETS AND INVESTMENT FUNDS SECTORS.

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ISFIRE REVIEW

RISK SHARING

VS RISK TRANSFER: IDENTIFYING FAULT

LINES IN CONVENTIONAL

FINANCE

DR. MUSTAPHA ABUBAKAR

he concept, theory, and practice of risk sharing as enshrined in Islamic finance remain a real mechanism for widening the space for participation in economic activities for growth and development. Indeed, risk sharing takes centre stage in Islamic finance as a catalyst for economic inclusion, thus accommodating the poor in more economic activities. Many fault lines have been identified in the existing practices of the conventional systems through risk transfer, which voids the essence of its institution as a nebulous structure to fund economic activities. The dysfunctional outing of conventional finance risk transfer mechanism is rarely documented. Hence, the efficacy of Islamic finance risk sharing mechanism that ought to be harnessed has not been adequately brought to the limelight.

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ISFIRE REVIEW

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ISFIRE REVIEW

WHAT IS RISK?

Risk is broadly defined as the probability of negative outcomes or potential losses that could lead to adverse impact. Such negative outcomes could be the result of an unexpected event arising, either from factors within the organisation such as staff negligence, mismanagement; or external forces outside the organisation such as sudden or drastic regulatory changes, unfavourable economic situations, as well as other changes in tax or interest rate structure that have significant impact on business performance. Risk can also be viewed in terms of uncertainties of future events happening, which might influence successful achievement of an organisation’s objectives and targets. In many conventional finance studies, risk relates to uncertainties that could result in financial loss. Risks may come from uncertainties in unexpected fluctuations in assets prices, in interest rates, project failures, legal liabilities, accidents, natural causes and disasters as well as deliberate attacks from an adversary.

FROM ISLAMIC PERSPECTIVE, MUKHATHARAH IS AN ARABIC WORD THAT MEANS RISK. PREVIOUS SCHOLARS HAVE PROVIDED A MORE DEFINITE DISTINCTION BETWEEN MUKHATHATARAH AND GHARAR WHERE MUKHATARAH IMPLIES RISK; WHILE GHARAR IS UNCERTAINTY.

1. Elgari, M. A. (2003). Credit risk in Islamic banking and finance. Islamic Economic Studies, 10(2), 1-25.

2. Van Gruening, H., Iqbal, Z. (2008). Risk analysis for Islamic banks. The World Bank, Washington D.C.

RISK SHARING AS A MECHANISM FOR SHARED PROSPERITY RISK CAN ALSO BE VIEWED IN TERMS OF UNCERTAINTIES OF FUTURE EVENTS HAPPENING, WHICH MIGHT INFLUENCE SUCCESSFUL ACHIEVEMENT OF AN ORGANISATION’S OBJECTIVES AND TARGETS. IN MANY CONVENTIONAL FINANCE STUDIES, RISK RELATES TO UNCERTAINTIES THAT COULD RESULT IN FINANCIAL LOSS.

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ISFIRE REVIEW

From Islamic perspective, mukhatharah is an Arabic word that means risk.1 Previous scholars have provided a more definite distinction between mukhathatarah and gharar where mukhatarah implies risk; while gharar is uncertainty.2 Thus, the prohibition of gharar is seen as a way of mitigating risk by avoiding deals with high informational asymmetry. But risk in Islamic parlance goes far beyond financial loss because it may start from the failure of fulfilling the promise or the aqad between two parties in a contract. When the two sides or individuals agreed, each parties promise to deliver their respective responsibilities, as laid down in the approved contract. Failure by any party to honour its obligation is tantamount to the risk of breaching the contract. Risk sharing being a mechanism for shared prosperity among humans has attracted a plethora of discourses within the Islamic finance scholars’ community, which view it as the defining principle of Islamic finance with its many benefits and potentials.

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ISFIRE REVIEW

RISK SHARING AS A MECHANISM FOR SHARED PROSPERITY

From Islamic perspective, mukhatharah is an Arabic word that means risk. Previous scholars have provided a more definite distinction between mukhathatarah and gharar where mukhatarah implies risk; while gharar is uncertainty. Thus, the prohibition of gharar is seen as a way of mitigating risk by avoiding deals with high informational asymmetry. But risk in Islamic parlance goes far beyond financial loss because it may start from the failure of fulfilling the promise or the aqad between two parties in a contract. When the two sides or individuals agreed, each parties promise to deliver their respective responsibilities, as laid down in the approved contract. Failure by any party to honour its obligation is tantamount to the risk of breaching the contract. Risk sharing being a mechanism for shared prosperity among humans has attracted a plethora of discourses within the Islamic finance scholarsâ&#x20AC;&#x2122; community, which view it as the defining principle of Islamic finance with its many benefits and potentials. The potential benefits include its capacity for bringing about growth in economic activities, ensuring financial stability, as well as enhancing business inclusion of many segments of human societies by way of creating opportunities for entrepreneurship and its development. This general view on the true nature of risk sharing in Islamic finance is however not shared by some scholars. One of the arguments made was that mudaraba, being a point of reference in depicting risk sharing nature of Islamic finance, was an economic institution born of temporal compulsions not only in Arabia but across the world.3 The central theme in this argument was that Islam encourages profit sharing of which sharing of risk becomes an arising consequence and not the cause in itself. This view is however incorrect given the fact that what is relevant here is the endorsement of the institution of mudarabah in Islam in the face of its risk sharing attribute emanating from information asymmetry problem, even though it originated from pre-Islamic era. This is more glaring given that where financial losses arise; the entrepreneur unless found negligent, loses not the money but his efforts and time.

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FAULT LINES IN RISK TRANSFER

Definitions of risk transfer tend to converge on shifting pure risk from one party to another. Many operational problems and designs in the financial system anchored on risk transfer doctrine tend to provide a recipe for chaos. Since risk is assumed to have been transferred to the recipient of funds, who in the eyes of the fundâ&#x20AC;&#x2122;s owner has no observed alternative, there exists predilection for free credit extension by conventional banks and the financial system as a whole. The economic system, more often than not, pays only lips service to strict credit assessment because of the false belief that no losses are expected, for the deficit unit is hamstrung. Allied to the above is the existence of inflationary pressures created by unrestrained credit expansion that are sometimes bereft of responsibility and prudence, which later becomes the subject matter for monetary policies formulation and implementation. The resultant effect on the system is seen in policy somersaults that frustrates financial inclusion right from micro finance level and extends to other wider levels. As such, the vulnerable poor are not better off as this leads to further financial exclusion as opposed to financial inclusion. Furthermore, the likelihood for accumulation of debt occasioned by penchant for giving risk transfer laden loan packages, which normally end up in fresh capital injections to sustain comatose entities, and usage of debt equity swaps, exacerbate low financial inclusion that leaves the vulnerable low income class to bear the brunt of economic malfunction. Thus, potentials for entrepreneurship anchored on shared prosperity inherent in Islamic risk sharing finance are not promoted, a move that could have brought higher economic growth. Another point of reference as a fault line in the risk transfer based financial system is the proliferation of fictitious assets that have the tag of derivatives, with their accompanying trading volume.

DR MUSTAPHA ABUBAKAR IS A LECTURER AT THE DEPARTMENT OF FINANCE AND BANKING,AHMADU BELLO UNIVERSITY SCHOOL OF BUSINESS, ZARIA, NIGERIA. HE MAY CONTACTED AT MUSTAPHA_AZ@YAHOO.COM

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POINT OF VIEW

GET YOUR

OFF THE

IDEA

GROUND MUHAMMAD ASHRAQ-UR-REHMAN

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POINT OF VIEW

ou have been thinking of starting out your own venture for some time now but you have not kicked that off yet. Don’t worry. You are not alone! This is the case with majority of people. The biggest hurdle is always fear of the unknown or perhaps you don’t have a clear idea on how to take your ideas forward and how to implement them. And so much other hindering noises that have been pulling you back and not giving you enough en-ergy to jump start. Have a sigh of relief! Yes, you heard it right. Take my words, don’t delay any further, just do it. My words may not sound profoundly compelling to pull your energies in you but the following speech excerpts will surely shake you off. “IDEAS DON’T COME OUT FULLY FORMED. THEY ONLY BECOME CLEAR AS YOU WORK ON THEM. YOU JUST HAVE TO GET STARTED. IF I HAD TO KNOW EVERYTHING ABOUT CONNECTING PEOPLE BEFORE I GOT STARTED I WOULD HAVE NEVER BUILT FACEBOOK”. Mark Zuckerberg. No one knows how the future is going to look like. But we have the ability to at least draw it by putting in our best efforts. When our present becomes past we can gauge only then whether the plight we took was worthwhile. This reminds me of Steve jobs who nicely once said, we can connect the dots only in the past.

Another example is LinkedIn. Who would have thought of this virtual empire to become so powerful. Am sensing through their recent activities on their platform, they are building so much interesting stuff for its network by harnessing the data, analytics, machine learn-ing and full use of Artificial Intelligence to its spirit. They are engaging it’s network to a greater benefit of its community. I can not discount LinkedIn will lead to having real net-work effects and will become the knowledge economy for professionals in the world. Crux: It’s relatively easy to build on something that already exists in some form than to start off something from the scratch. However, do visualize that jumping in the river can at least give you a chance of survival when you are seeing a certain death behind you if you keep sanding at the bank and eaten away by a beast. It’s never been that easy to kick-start your startup than now. Look at the opportunities that exist in the form of problems which you can solve. Think of your own job/industry such as banking, insurance, Investments, real estate where you have been unhappy because of the bottlenecks, processes, pricing and similar other issues linked to the offerings. SO, GET YOUR IDEA OFF THE GROUND! Failure and regrets are guaranteed if you don’t try, but if you try, you have a fair chance of SUCCESS.

IDEAS DON’T COME OUT FULLY FORMED. THEY ONLY BECOME CLEAR AS YOU WORK ON THEM. YOU JUST HAVE TO GET STARTED. IF I HAD TO KNOW EVERYTHING ABOUT CONNECTING PEOPLE BEFORE I GOT STARTED I WOULD HAVE NEVER BUILT FACEBOOK. MARK ZUCKERBERG

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MUHAMMAD ASHRAQ-UR-REHMAN IS THE FOUNDER AND CEO AT FINMAAL.COM. HE IS A QUALIFIED EXECUTIVE WITH 21 YEARS OF INTERNATIONAL EXPERIENCED LINKED TO MANAGE-MENT CONSULTING & ADVISORY, BANKING, TAKAFUL AND INSURANCE.

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TALKING POINTS

DIGITAL MYOPIA:

WIDENING

PERSPECTIVE TO

ACHIEVE BUSINESS

GROWTH

AHMED ALBALOOSHI

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Myopia | noun | my-o-pia: a lack of foresight or discernment: a narrow view of something. Merriam-Webster.

It was a dark era for the railroad industry. Some railroad businesses failed, and some suffered a steep decline in their businesses as a result of competition from, at that time, the emerging aviation industry and the uptake of motor vehicles usage. In a Harvard Business Review article titled “Marketing Myopia”, Theodore Levitt asserts that railroad businesses failed not because of the declining use of railroads by customers opting to use airplanes and cars, but rather because the management of railroad limited their view of their business as only a railroad transportation provider. If they only widened their perspective to the broader industry of transportation and focused on what their customers need (i.e. moving from point A to point B, regardless of the mean of transportation), maybe then they had a chance to survive. YET, BUSINESSES DON’T LEARN FROM PAST MISTAKES

Every business strives to sustain growth. Nevertheless, executives set up their selves for failures because of two things. First, they limit their view to their current business activities rather than looking at the industry as a whole (e.g. railroad vs transportation). Second, they think in terms of products not what their customers want. Nevertheless, businesses continue their limited perspective and point fingers to market saturation or sluggish economy. If only brick-and-mortar retailers focused on their customers need for shopping regardless of the medium (i.e. physical store vs Internet), they would have had a better chance to survive against Amazon and eBay. If Kodak understood their customers need and widened their perspective over a product-limited view of selling film-based cameras, they could have avoided filing for bankruptcy protection back in 2012.

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Therefore, to achieve sustainable growth, businesses must widen their perspective by: • Looking at the macro industry and which they operate in, not only the current line of business. • Focusing on customer experience and needs, not pushing specific products and services. • Examining disruptive technologies and business models occurring inside and outside their industry. DIGITAL MYOPIA

The same lack of foresight to the benefits of digital business is happening now. The perspective of executives on what digital means to their business will determine its impact on their business. If the executives have a limited view of what digital technologies can do for the company, then they shall expect mediocre business outcomes. In retrospect, to really maximize the benefit to the business, it’s crucial to have a broader perspective, going beyond seeing digital as a merely an automation tool or even a set of technologies to improve the customer experience, to seeing it as the opportunity to transform the business that can grow and thrive in the digital era. WIDENING PERSPECTIVE BUSINESS GROWTH

ACHIEVE

There are primarily three perspectives when it comes to how digital can contribute to the business: • AUTOMATION PERSPECTIVE:

is the use of technology to automate business processes and transactions. When business executives confine digital to this perspective, the business outcome of their digital initiatives will be limited to an efficient and effective business. • CUSTOMER EXPERIENCE PERSPECTIVE:

is the use of technology to acquire new customers and increase customers retention. When business executives confine digital to this perspective, the business outcome of their digital initiatives will be limited to growing market share in their industry.

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• DIGITAL TRANSFORMATION PERSPECTIVE:

is the use of technology, not only to automate and elevate customer experience but also to build a new set of capabilities that able to create new sources of revenue through extending the current business model to the digital ecosystem.

IN RETROSPECT, TO REALLY MAXIMIZE THE BENEFIT TO THE BUSINESS, IT’S CRUCIAL TO HAVE A BROADER PERSPECTIVE, GOING BEYOND SEEING DIGITAL AS A MERELY AN AUTOMATION TOOL OR EVEN A SET OF TECHNOLOGIES TO IMPROVE THE CUSTOMER EXPERIENCE, TO SEEING IT AS THE OPPORTUNITY TO TRANSFORM THE BUSINESS THAT CAN GROW AND THRIVE IN THE DIGITAL ERA.

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DIGITAL PERSPECTIVES & BUSINESS OUTCOMES 1

AUTOMATION VIEW The use of technology to automate business processes and transactions

BUSINESS OUTCOME

Effective & Efficient Business

DIGITAL TRANSFORMATION VIEW Digital to the core. The use of a digital eco system & digital capabilities to create new sources of revenue

CUSTOMER EXPERIENCE VIEW The use of technology to acquire new customers and increase customer retention

BUSINESS OUTCOME

Growing market share

Industry leader focusing on growth & profitability

The infographic illustrates the above. REAPING THE DIGITAL BENEFITS

To avoid Digital Myopia, business executives are encouraged to widen their perspective on how digital can benefit their business and their customers. As technology is weaved into the fabric of our lives, its shaping our habits and expectations. Such habits and expectations should be examined by businesses to ensure that they stay relevant to their customers and to strive to add value to them. Business executives, therefore, need to determine the vision of their business in the digital era. Once the vision is set, executives then need to devise and execute a strategy to position their business in the digital age.

AHMED ALBALOOSHI IS THE GROUP CHIEF INFORMATION OFFICER (CIO)/HEAD OF INFORMATION TECHNOLOGY AT AL BARAKA BANKING GROUP (ABG). HE IS THE CHAIRMAN OF DIGITAL AND CYBERSECURITY COMMITTEE OF BAHRAIN ASSOCIATION OF BANKS, ADVISORY BOARD MEMBER AT BAHRAIN FINTECH BAY AND DIGITAL BANKING INSTRUCTOR AT BAHRAIN INSTITUTE OF BANKING AND FINANCE (BIBF).

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MBRID

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IFLP

Cambridge-IFLP Alumni

ABED HAKIM

AVP, Head of Social Media, Dubai Islamic Bank, UAE

WHAT WAS YOUR EARLIEST AMBITION?

WHAT ARE YOU MOST PROUD OF IN YOUR CAREER?

From a young age I have always had ideas, and constantly thinking of innovative ways of doing things so that it may impact my life and others around me, spiritually and physically. I guess this ambition is still strong within me and continues to evolve.

My career has given me the opportunity to travel and work across the globe. Learning and immersing myself in other cultures is something I am extremely proud of, as I believe these experiences help shape me as a person. However, taking the step to join Dubai Islamic Bank and being given the opportunity to learn about Islamic finance in a practical perspective whilst at the same time imparting my digital and social expertise is what I am most proud of currently.

WHAT ARE YOU PASSIONATE ABOUT? Taking Islamic finance into the digital age and ensuring the masses can benefit from it is my passion. Having spent 10 years plus in the digital space, the past 2 years have been about immersing myself within Islamic finance and combining the two for the benefit of others, and more importantly to those less fortunate than myself.

WHO HAS BEEN YOUR GREATEST MENTOR? To single out any one person is very difficult as I’ve learned so much from everyone. I believe we can learn something from everyone for everyone has qualities and areas that are better than us. Appreciating the qualities in others and attempting to replicate these qualities in my life continues to serve me well.

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I am proud and thankful for having the opportunities to travel and live in some of the most amazing cities in the world. God via my career has allowed me to immerse myself within other cultures, learning, adapting and bettering myself; and at the same time allowing me and my family to flourish and experience all this together.

WHAT DO YOU DO WHEN YOU ARE NOT WORKING? I try to make the most of my time by taking part in initiatives and projects that help me grow as a person and God willing, serve me well in this life and the hereafter. Currently, my spare time is taken up by 2 major projects - helping my wife launch a Muslim children’s book series and working on a digital murabaha market place app to serve low skilled workers and the unbanked population in the Middle East.

WHAT HAS BEEN THE MOST SATISFYING MOMENT IN YOUR LIFE? There are 3 life moments that I have been blessed with that have given me life purpose and provided me with commitment and enthusiasm to face any challenge, thus making them the most satisfying moments - marrying my best friend and the birth of my 2 beautiful children (Mash Allah!)

IN ONE WORD, DESCRIBE YOURSELF. Creative

WHAT IS YOUR FAVORITE QUOTE AND WHY? “What you seek is seeking you” – Rumi Such few words but so much to ponder on. This quote has been particularly relevant for me and my career. I am constantly looking for the right balance between ‘feeding my soul’ – doing work that will allow me to give back to others and provide me with wealth in the afterlife and also ‘feeding my family’; and at the same time ensuring that I am able to pay the bills and provide for my family. In this competitive world it is not always easy to do both, but the quote gives me hope and reminds me to be patient and keep struggling in search of this ideal. As long as we keep working towards our goal, it will soon come to us.

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IF YOU COULD GO BACK AND GIVE YOUR 21-YEAR OLD SELF A VALUABLE PIECE OF ADVICE, WHAT WOULD YOU SAY? Keep learning, keep striving. Do not focus on others, but have faith that there is a plan for you and as long as you are doing good, good will come unto you.

WHAT IS YOUR LEADERSHIP PHILOSOPHY? Leading by example. Behave how you want others to behave, treat others how you expect to be treated, and respect everyone regardless of their position. This, combined with a collaborative and positive work ethic, I believe works very well.

WHAT DRIVES YOU IN YOUR PROFESSIONAL LIFE? Making a difference. For myself, those around me, and those less fortunate then myself. I do not seek titles, fame or fortune. My professional life is centred around providing for my family, who are my priority above all else and ensuring that the work I do is relevant and purposeful. Right now its ensuring people are made aware of the benefits of Sharia-compliant banking and see this as a viable alternative to commercial banking and their products.

IF YOU COULD MEET A FAMOUS PERSON/LEADER/CELEBRITY, WHO WOULD HE BE AND WHY? I look back with fondness at times when Muslims were at the pinnacle of innovation and education; bringing light to the world when the West were living in the dark ages. So much of these periods have been ignored by the West, even though Muslims have contributed so much.

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It would have been a great honour to have been a student of the mathematician Muhammad ibn Musa al – Khwarizmi, latinized as ‘Algorithmi’. Aside from the fact that he invented Algebra and trigonometry, he was also the head of the library of the ‘Bayt al Hikmah’ (House of Wisdom). The fact that not much historical documentation now exists of his early life, or that particular period of time, increases my yearning to meet this majestic figure.

IF YOU RETIRED TOMORROW AND WANTED TO START A DIFFERENT SECOND CAREER, WHAT WOULD YOU DO? Unfortunately, I have a pretty boring answer, but very practical for the world and my projects today. I would have made it my goal to be an accomplished computer programmer. This would have helped realise my ambition to develop Islamic financial applications quicker. But then maybe I would not have had the ability to conceive innovative ideas… Allah is the best of all planners.

YOU ARE AN ALUMNI OF THE CAMBRIDGE ISLAMIC FINANCE LEADERSHIP PROGRAMME. HOW WAS YOUR EXPERIENCE ATTENDING THE PROGRAMME? The Cambridge Islamic Finance Leadership Programme was a wonderful experience and pivotal moment for me. Being fairly new to Islamic finance, I found myself surrounded by those who have been working in the industry for years and have accomplished much. I was in awe by my peers and speakers who took time out to share their knowledge and insights. I must say that I really enjoyed the assignments in the sessions. I am honoured to be a part of the programme and felt enriched by attending it. Furthermore, it cemented my enthusiasm for Islamic finance and my enthusiasm and hunger to create digital Islamic products that I believe would would benefit the masses.

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HONESTLY

DIS-HONEST:

A BEHAVIORAL

MODEL OF

FINANCIAL

DIS-HONESTY JUNAID SAHIBZADA

IT IS DIFFICULT TO GET A MAN TO BE HONEST WHEN HIS SALARY DEPENDS UPON NOT BEING HONEST. -UPTON SINCLAIR

Latest research in Behavioural Economics shows that governments and corporations have been fighting dishonesty the wrong way. Dishonesty cannot be totally eliminated but like any other human behaviour, we can aim to better understand dishonesty and significantly save on the enormous cost of compliance and surveillance that is currently spent on monitoring, controlling and detecting dishonesty. The latest round of Royal Commission inquiry has brought dishonesty back into limelight. “Greed behind misconduct” is how Australian news outlets have summarised the 347 page Interim Report of the Australian Financial Services Royal Commission. Matt Comyn, CEO CBA, has admitted the bank became complacent and suffered from leadership failings and instances of greed, all of which resulted in “far too many” customers being mistreated. The inaugural Deloitte Trust Index, Banking 2018 IPSOS poll, has found that four in five Australians believe banks don’t act ethically. The Banking Royal Commission also published summaries of misconduct among major banks including fraud, forgery, theft and assault. Among a host of examples, the summary outlined Commbank staff forging signatures and Westpac staff set up bogus accounts in customers’ names. AMP did not report large cash deposits to an anti money laundering group and a NAB-aligned planner misappropriated funds from a client’s superannuation.

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Governments are not the only ones worrying about greed and dis-honesty. Corporations spend millions if not billions on mandatory ethical training and expensive compliance software. However, little is done to understand why people behave dishonestly? Maybe we are fighting the wrong enemy! So where should we look for answers? The latest developments in field of Behavioural Economics may provide some help. RATIONALLY DISHONEST: A SIMPLE MODEL OF CRIMINAL BEHAVIOR ( SMORC )

Dr. Dan Ariely, a Professor of Behavioral Economics at Duke University has thoroughly investigated dishonesty in his best selling book “The Honest Truth About Dishonesty”. Dr. Ariely identifies Gary Becker, a Nobel laureate, as the person who suggested that people commit crimes based on a rational-cost-benefit-analysis of each opportunity.

1. Yaniv, G. and Siniver, E., 2016. The (honest) truth about rational dishonesty. Journal of Economic Psychology, 53, pp.131-140.

2. Ariely, D., 2013. The Honest Truth about Dishonesty: How We Lie to Everyone-Especially Ourselves. HarperCollins Publishers.

“One day, Becker was running late for a meeting and decided to park illegally and risk a ticket. Becker observed that his decision had been entirely a matter of weighing the conceivable cost—being caught, fined, and possibly towed—against the benefit of getting to the meeting in time. He also noted that in weighing the costs versus the benefits, there was no place for consideration of right or wrong; it was simply about the comparison of possible positive and negative outcomes. And thus the Simple Model of Rational Crime (SMORC) was born.1 According to Becker’s logic, when committing a robbery, we base our decisions on a cost-benefit calculation, and decide whether it is worth it to rob the place or not. The essence of Becker’s theory is that decisions about honesty, like most other decisions, are based on a cost-benefit analysis.2 The same cost-benefit analysis that one uses to purchase cars, homes and iPhones. Becker’s model of dishonesty can be expressed in a simple mathematical model listed below: PROBABILITY OF CHEATING = AVAILABILITY OF CHANCES TO CHEAT ± NET BENEFIT FROM CHEATING

If Gary Becker’s model of dishonesty is accurate in describing how Australian financial organisations cheat, Dr. Ariely suggested that Australian regulators have two clear means for avoiding any future Royal Commissions. First is to increase the probability of being caught (by introducing more tougher regulations, funding more staff hiring at financial regulators, and investing in more surveillance software). Second, increase the magnitude of punishment for people who get caught (for example, by imposing steeper prison sentences and fines). And in fact, this is exactly what most governments, corporations and regulatory bodies have been doing for the last century! Increasing surveillance, introducing tougher and complex laws, setting precedents in the form of strict punishments and of course ordering Royal Commissions. In fact, this seems to be the default response of the government’s regulators to every instance of corporate misconduct.

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For example, the Enron fiasco brought about a large set of reporting regulations known as the Sarbanes-Oxley Act, and the financial crisis of 2008 ushered in an even larger set of regulations (largely emerging from the Dodd-Frank Wall Street Reform and Consumer Protection Act), which were designed to regulate and increase the supervision of the financial industry. But despite all this, dishonest behaviour is on the rise and every decade or so, we get to read about how a greedy person swindled clients and indulged in dishonest criminal activity. It seems that there is no end and solution to human dishonesty. Are we doomed to have Royal Commissions on a per-decade basis? Or can we re-think our approach and understanding and ultimately prevention of dishonesty? BEHAVIOURAL ECONOMICS: PLUGGING THE GAP

Gary Becker’s SMORC is based on Adam Smith’s idea of people being rational profit maximising agents using cost-benefit analysis in every decision of life. But what if humans are not the agents of rationality that Adam Smith had wanted us to be? and what if our understanding of dis-honesty based on 18th century classical economics is flawed and no longer helps in combating unethical behaviour in the workplace? As long as there is coherence between ego-motivation and financial motivation, a person will continue with acts of dishonesty ( or honesty). Latest ground breaking studies in behavioural sciences have already challenged Adam Smith’s famous “invisible-hand” theory, which advocated the long standing view of self-regulating markets and rational agents making rational choices. Noble prize winning research studies by Daniel Khaneman and Richard Thaler have provided new evidence that not only are markets not self-regulating and require some form of supervision, it happens so that the famed and prized rationality of humans is also a mere delusion.

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The human decision making process is riddled with cognitive biases such as confirmation bias, hindsight bias and loss aversion. 40,000 years ago, these cognitive biases were of great utility to the hunter gatherer nomads of the African savanna as it helped those foragers to make quick decisions in the face of life threatening situations based on past experience and intuitive gut instincts. But the same cognitive biases, which helped ancient humans survive and thrive in the hostile environments of pre-historic Africa, have now become an evolutionary cognitive burden on the techno-humans of 21st century.

The second process is the well known money making, greedy-selfish-gene process that gives us financial motivation and encourages us to make as much money as possible even if that means being dishonest and unethical. As long as there is coherence between the ego-motivation process and the financial motivation process, a person will continue with acts of dishonesty (or honesty). But the moment, ego-motivation creates a cognitive dissonance and jeopardises the self-worth and self-image of a would-be criminal, the criminal will potentially desist from committing the crime.

Hence, the mathematical model I presented earlier, which paints human dishonesty as a function of rational costbenefit style decision making, requires serious revision or at least a healthy dosage of behavioural insights. Individuals are honest or dishonest only to the extent that is allowed by their superego. Are decisions about dishonesty based on the same cost-benefit analysis that we use to decide between cars, homes, gadgets and iPhones? A person can provide a detailed cost-benefit analysis of purchasing an iPhone but can you expect a banker providing a cost-benefit analysis of charging fees from clients who are long dead? It seems that there is something else involved as well while making a decision to cheat. Behavioural economics provides us with a good explanation and helps in completing the mathematical model.

The superego is the ethical component of the personality. It provides the moral standards by which the ego operates.3 According to Sigmund Freud, as we grow up in society, we internalise the social virtues. This internalisation leads to the development of the superego. In general, the superego is pleased when we comply with society’s ethics, and unhappy when we don’t. This is why we stop our car at four in the morning when we see a red light, even if we know that no one is around; and it is why we get a warm feeling when we return a lost wallet to its owner, even if our identity is never revealed. Such acts stimulate the reward centers of our brains and make us content. According to this perspective, individuals are honest or dishonest only to the extent that is allowed by their superego.4

A TALE OF TWO MOTIVATIONS: SELF-IMAGE VS SELF-INTEREST

Psychologists explain that every person has two competing psychological motivations. The first one arises from a person’s self-image, self-worth and self-esteem. This motivation informs and helps a person draw the line of what is unethical and what is not unethical. The main aim of this motivation is to make us look good in our own eyes (self-respect) so that we can stand in front of a mirror and pat ourselves on the back for our honesty and ethics. Our own morality is connected to amount of dishonesty we’re comfortable with. Psychologists call this ego-motivation.

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SUPER EGO: THE FREUDIAN VARIABLE

The left-brain responsible for rational cost-benefit analysis is only consulted at a later stage depending upon the decision made by the Freudian super ego. So, is it the Freudian super ego that decides whether stealing a towel from a hotel is fair go OR is it the cost-benefit analysis of Adam Smith that decides whether adding a few fraudulent receipts to the tax statement is not a big issue? Who is going to consciously weigh the benefits of stealing a few pens from the office stationery versus the cost of being caught and loss of employment? Based on the discussion so far, we can add the “Freudian variable” to our under-development mathematical model.

3. Encyclopedia Britannica. 2018. Superego | psychology | Britannica.com. [ONLINE] Available at: https://www. britannica.com/ science/superego. [Accessed 21 October 2018].

4. Ariely, D., 2013. The Honest Truth about Dishonesty: How We Lie to Everyone-Especially Ourselves. HarperCollins Publishers.

THE SUPEREGO IS THE ETHICAL COMPONENT OF THE PERSONALITY. IT PROVIDES THE MORAL STANDARDS BY WHICH THE EGO OPERATES. ACCORDING TO SIGMUND FREUD, AS WE GROW UP IN SOCIETY, WE INTERNALISE THE SOCIAL VIRTUES. THIS INTERNALISATION LEADS TO THE DEVELOPMENT OF THE SUPEREGO.

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5. Ariely, D., 2013. The Honest Truth about Dishonesty: How We Lie to Everyone-Especially Ourselves. HarperCollins Publishers.

EXPERIMENTS CONDUCTED BY DR. ARIELY AT HARVARD HAVE SHOWN THAT CRIMINALS AND DISHONEST PEOPLE RARELY USE COSTBENEFIT ANALYSIS TO DECIDE WHETHER TO GO AHEAD WITH A CRIME AND THE PROBABILITY OF GETTING CAUGHT IS ONLY A FACTOR CONSIDERED WHILE PLANNING THE LOGISTICAL DETAILS OF THE CRIME BUT IT HARDLY MAKES A PERMANENT DETERRENT.

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PROBABILITY OF CHEATING = GO/NO GO DECISION BY FREUDIAN SUPEREGO X (AVAILABILITY OF CHANCES TO CHEAT ± NET BENEFIT FROM CHEATING) OR I can simply re-write the above as

PROBABILITY OF CHEATING = (FREUDIAN SUPER EGO VARIABLE) X (AVAILABILITY OF CHANCES TO CHEAT) ± (NET BENEFIT FROM CHEATING) So what I am stating through my model is that the decision making process involved in committing a dishonest act, first consults the Freudian super ego, which makes the Go or No Go decision. The rational cost benefit analysis of the left-brain only gets used at a later stage depending upon the response of the Freudian super ego. This may explain why a banker (the same one grilled at the Royal Commission) will observe speed limits while on his way to work one a given day but will not hesitate robbing the life time savings of a soon-to-retire client on the very same day. FIGHTING SUPER GREED WITH SUPER EGO

The insight for lawmakers is that even today, laws and regulations have focused on reducing the chances of criminals committing crimes plus increasing punishments for those who get caught. But nothing has been done to incorporate the Freudian super ego and the role it plays in a would-be criminal’s decision making process. Just like marketing departments spend billions trying to map out consumer behaviour and buying patterns, governments and regulators need to understand dishonesty as a human behaviour and the role played by the super ego in dishonest decision making. Experiments conducted by Dr. Ariely at Harvard have shown that criminals and dishonest people rarely use cost-benefit analysis to decide whether to go ahead with a crime and the probability of getting caught is only a factor considered while planning the logistical details of the crime but it hardly makes a permanent deterrent.

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Dr. Ariely’s experiments indicate that contrary to classical economic explanations, dishonest behaviour is not rooted in a simple cost-benefit analysis, i.e. the level of dishonesty is not influenced by the amount of money we stand to gain from a dishonest act. Moreover, the level of dishonesty is also not influenced by changes in the probability of being caught while committing a dishonest act. This has a wider implication for the regulators of financial markets. As mentioned earlier, the regulators have been focusing too much on the traditional crime fighting tools such as surveillance and stricter punishments but no attention has been given to the role played by the super ego in the decision making process that results in dishonest behaviour. HACKING SUPER EGOS: A VIABLE SOLUTION

So how exactly can governments benefit from the insights shared in the passages above? Dr. Ariely provides some valuable lessons.

1. REDUCE THE DISTANCE BETWEEN THE ACT OF DISHONESTY AND THE ACTUAL EXCHANGE OF VALUE. When we look at the world around us, much of the dishonesty we see involves cheating that is one step removed from cash. Companies cheat with their accounting practices; executives cheat by using backdated stock options; lobbyists cheat by underwriting parties for politicians; drug companies cheat by sending doctors and their wives off on posh vacations. These people cheat but not by literally stealing cash from another person. Cheating is a lot easier when it’s a step removed from money.5 So governments should some how “nudge” or “prime” would-becriminals and remind them that fiddling with a few parameters on an excel sheet and changing the value of R from 0.834 to 0.835 is no different to stealing cash from a colleague who has left his wallet at his desk.

2. LEARN TO MANIPULATE THE SUPER EGO. It is estimated that when consumers report losses on their homes and cars, they creatively stretch their claims by about 10%. Many people who have lost, say, a 27-inch television set report the loss of a 32-inch set and so on.

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According to Dr. Ariely, these same people would be unlikely to steal money directly from the insurance companies, but have no hesitation reporting what they never had—and increasing its size and value by just a little bit. Insurance companies have known this secret for decades: Customers cheat and inflate their insurance claims but only by a small margin or in other words what is acceptable to the super egos. Hence, creating a completely honest society may not be possible but governments can work on training the super egos of its citizens and raise the standard of honesty. This can result in considerable financial benefit in the form of reduced surveillance and compliance costs incurred by regulators and corporations to keep their subjects honest and ethical.

Since I wrote this article, it has been announced that The Commonwealth Bank will be the first bank to have staff from the corporate regulator embedded inside its workplace to investigate potential instances of misconduct.6 So in other words, tighter scrutiny, more supervision and extra oversight but no importance given to Freud’s super-ego!

* THE BULK OF IDEAS AND RESEARCH MATERIAL FOR THIS ARTICLE IS TAKEN FROM DAN ARIELY’S BOOK, THE HONEST TRUTH ABOUT DISHONESTY.

3. BALANCE THE EQUATION Just reducing the chances of crime and reducing the net benefit of committing crime may not be a very sound strategy to fight dishonesty. Remember there are three parts to the equation. We have been investing all the effort in just two of them. The effort needs to be distributed across all three.

PROBABILITY OF CHEATING = (FREUDIAN SUPER EGO VARIABLE) X (AVAILABILITY OF CHANCES TO CHEAT) ± (NET BENEFIT FROM CHEATING) 4. KEEP HONEST PEOPLE HONEST Dr. Ariely mentions an amusing incident pertinent to the discussion on dishonesty. One of his friend gets locked out and is helped by a locksmith to get back into his home. The friend is amazed at how quickly the locksmith “broke” in and ended his ordeal. In response, the locksmith shares the following pearls of wisdom: ”Locks are on doors only to keep honest people honest. One percent of people will always be honest and never steal. Another one percent will always be dishonest and always try to steal. And the rest of 98% will be honest as long as the conditions are right. Tempt them enough and they’ll be dishonest too. Locks mostly protect from every day honest people who get tempted and become dishonest.”

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JUNAID SAHIBZADA IS CIO ADVISORY AND CONSULTING MANAGER: TECHNOLOGY STRATEGY AT KPMG, AUSTRALIA. ALL OPINIONS EXPRESSED ARE HIS OWN AND NOT TO BE ASSOCIATED WITH HIS EMPLOYER OR ANY OTHER ORGANIZATION HE IS CONNECTED WITH.

6. https://www.smh. com.au/business/ banking-and-finance/ not-a-nickeland-dimeconversationasic-needs-to-bebigger-chieftells-parliament20181025-p50bs8. html

PERSPECTIVES

CAN

ETHICS BE

TAUGHT AND

LEARNED?

The subject of ethics has always been a topic of considerate discussion throughout the history of mankind and has been one of the oldest issues of discourse. One might think that, after all this time, everything worth saying on the subject has already been expressed. History shows, however, that whenever one ethical situation has been thoroughly explored; the ground shifts, the winds veer, and we find ourselves in new territory where old ethical maps are inadequate. Case in point, the subject of Artificial Intelligence and self-driving cars has opened up a new area of discussion that was not thought about even 5 years ago. Over the last three decades, the subject of ethics has attracted growing interest from corporations, governments and international organisations. Today ethics has claimed centre stage and has become more essential than ever in an age of light-speed technological change, commercialism and global challenges. Scandals, fraud and evidence of unethical behaviours in politics, banking and management have dominated headlines in mainstream media and often left us shaking our heads. The breadth and depth of these headlines seem to suggest that attention to ethics should perhaps focus not only on individual probity but also on how social structures provide incentives and disincentives to ethical and non-ethical behaviour. But the irony of it is that even though ethics, both as a field of study and practice, have received greater emphasis in recent years; there is lack of any apparent impact on the way people and organisations actually behave.

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According to an editorial piece published by the Wall Street Journal some years ago, ethics courses and trainings are useless because ethics can’t be taught. Critics argue that ethics can’t be taught or learned in classrooms as ethics are viewed as a natural behaviour - a product of upbringing that cannot be changed. Others, who call themselves ethicists, would side with the ancient Greek philosopher Socrates, who concluded some 2,500 years ago that people can be taught to do right and virtues can be taught. He believed that if one knows what the good is, one will always do what is good. From the Islamic perspective, the comparable word for ethics is akhlaq, which is construed as morality. In the Western context, the principles of ethics are often discussed with respect to gains and benefits to society at large. What is good or bad is supposedly determined by the rule of the majority, with little attention given to the principles of morality. This is where ethics in Islam differ from the Western concept. In Islam, ethics are derived from the Quran and from the practices of the Prophet (PBUH). Hence, it is a set of beliefs and actions that is divine and transcends the limitations of time, place and tradition. Now coming back to the question at hand… can ethics be taught? The consensus seems to be that, yes it can be taught. Then the next question is whether we are making making sure it is learned. Read what professionals have to say about this issue.

NORAZAH ANNUAR VICE PRESIDENT, GROUP COMPLIANCE, CIMB MALAYSIA

Coming from a heavily regulated banking industry, I can say that ethics is an essential value that needs to be embedded in any organisation. Ethics can definitely be taught and learned, and in this industry, it is imperative that all stakeholders do so.

ALL THINGS SAID, WE OURSELVES ARE RESPONSIBLE FOR UNDERSTANDING AND APPLYING GOOD MORAL ETHICS THAT HAVE BEEN TAUGHT TO US. YES, ETHICS CAN BE LEARNED, BUT ULTIMATELY IT IS HOW WE USE IT THAT WILL EVENTUALLY DEFINE US.

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In an age when information can be accessed and disseminated with such speed never before seen in human history, good moral ethics is more important than ever. Cases of breaches of trust, bribes, fraud and misuse of power is all too common in today’s newsfeeds, despite the advances in education and technology. Having processes and procedures in place and adequate training programmes to develop good ethics culture does not guarantee employees practice good ethics, but ultimately the responsibility trickles down to the individuals themselves. Ethics must be taught at all stages of life, either through education, regulation or by penalisation. One of the best methods of teaching good moral values is probably through examples. For instance, the top management of an organisation should practice good moral ethics and set the tone for it to be trickled down to all employees. Programmes should be in place to create an ethics culture within an organisation and it should be done regularly, and not as a one-time affair. Employees need to understand the principles of good moral ethics and must be able to apply them in various situations, which they will encounter. All things said, we ourselves are responsible for understanding and applying good moral ethics that have been taught to us. Yes, ethics can be learned, but ultimately it is how we use it that will eventually define us.

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MOHAMMED HASAN KHAN CHIEF RISK & COMPLIANCE OFFICER RAK INSURANCE, UAE

Humans are born learners. As such ethics can be taught and learned. As we grow, our family instil values in us, and our society has an influence on what we learn and how we behave. While ethics can be taught, it is equally important to make sure it is learned. Organisation’s should ensure that ethics are imbibed within the business fabric, and is a continuous process and not a one time teaching. It is the responsibility of the organisation to ensure the lessons are reinforced time and again. Hence, it is imperative that leaders walk the talk for employees to follow suit. If leaders fail to model ethical behaviour, this sends the message that ethical behaviour is not important. It is not just the tone at the top which is very important in communicating the ethical framework to employees, the same message should be communicated to vendors and business partners so that they understand the ethical values that the company upholds. Along with communication, it is also important that leaders set examples for actions taken against unethical behaviour and communicate these to employees appropriately. Ethical principles can be taught with the right learning methods and proper action plans in place.

RETNO MARUTI ECONOMIST & INTERNATIONAL AFFAIRS PRACTITIONER FISCAL POLICY AGENCY, MINISTRY OF FINANCE, INDONESIA According to Socrates and Aristotle, ethics is not a natural behaviour and therefore can be taught. Ethics comprise of logical thinking towards an ethical dilemma where a person’s logical thinking is formed based on values and moral standards defined by society. Thus, it is possible for such knowledge to be formally taught and formal education can play an important role in transferring the knowledge. Others argue that ethics cannot be taught as it is difficult to change a person’s habits, values and beliefs. According to them, setting out to make someone more ethical through directed learning might actually be counterproductive as ethics are not a list of dos and don’ts. Given that a person’s ability to deal with ethical issues is developed in different stages in his or her lifetime, education can contribute to their ethical development. But the formal system should not be the main tool of any ethics enforcement system. Formal education is only a part of a long internalisation process, which is far more important than just teaching ethics. Since ethical behaviours are also influenced through learning and observing others’ behaviour, a support system is required to promote, enforce and sustain ethical behaviour. Leadership and learning from examples around us is the most effective tool in transferring and enforcing ethical values.

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DR. HOUSSEM EDDINE BEDOUI GLOBAL LEAD ISLAMIC FINANCE EXPERT, ISLAMIC DEVELOPMENT BANK, KINGDOM OF SAUDI ARABIA

Teaching ethics is a necessity nowadays and is regarded as important as teaching mathematics and economics. In fact, ethical education applies for all ages. It begins from early childhood and continues in adult life. However, when considering what should be taught and learned, we come to realise that this is not as straightforward it appears. There are no ready solutions for teaching ethics. It may be through showing the importance of ethics in our lives, or teaching to ask the right questions and to formulate them well. Hence, there is a need to study ethics at its theoretical level as those of Al-Farabi, Ghazali, Ibn Muskawi, Plato, Aristotle, Francis Bacon, Dewey, Kant, Freud, and others. Theoretical aspects of ethics are still important because ethics will not be applied if it is not understood. However, education itself is not sufficient to change the attitude of learners. Ethics shouldn’t be taught in vacuum. We need to teach applied ethics. But this should be taught in line with the learner’s professional responsibilities. The leaner should master the field of application as well on how to apply ethical decisions in his or her professional practice.

MOHD FEQAH MOHD NGADIL ISLAMIC BANKING COMPLIANCE DIRECTOR & REGIONAL HEAD OF SHARIAH COMPLIANCE REVIEW GROUP COMPLIANCE, CIMB MALAYSIA Indeed, ethics can be taught and learned. Ethics in essence are the moral standards used to judge right from wrong. In an organisation like financial institution, more so in an Islamic bank where good virtues are equally important to the bottom line; doing the right thing even when no one is watching is paramount and supreme. In my humble opinion, an effective leader should not only create ethical code for his organisation, but must embrace and live with it even outside of work. Ultimately, the code should not only be enforced but continuously reinforced so that the glue that holds the culture in the organisation can be sustained.

TEACHING ETHICS IS A NECESSITY NOWADAYS AND IS REGARDED AS IMPORTANT AS TEACHING MATHEMATICS AND ECONOMICS. IN FACT, ETHICAL EDUCATION APPLIES FOR ALL AGES. IT BEGINS FROM EARLY CHILDHOOD AND CONTINUES IN ADULT LIFE.

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RONNIE FAIZAL TAN VICE PRESIDENT, HAO HALAL HUB, SINGAPORE

It all starts with individual vision and mindset. In another word, spiritually and physically. Ethics is a set of principles that govern own decision making in choosing right or wrong. Individual ethics always start from self reflection and seeking for guidance through either a mentor or reference through self searching in reading. The modern technology and social communication have disrupted the traditional way of networking. Hence, the art of ethical way of approach should be: Respect, Generosity and Trust.

ABD RAZAK MISBAN SENIOR MANAGER OF ETHICS, INTEGRITY & BUSINESS CONTINUITY MANAGEMENT MIMOS BERHAD, MALAYSIA The word ethics is derived from the Greek word ethos, which means character or manners. But unfortunately ethics is collapsing in each and every sphere of life, so teaching this fundamental way of life is the need of the hour. Ethics is a broad subject area with deep philosophical roots that impact many aspects of human behaviour. It is more than a set of rules. It is about knowing how to apply the rules and having the strength of character to behave in an ethical manner. General speaking, the definition of ethics relates to an individual character and social rules governing right and wrong. As such behaving ethically is what we do because it is the right thing to do. THE WORD ETHICS IS DERIVED FROM THE GREEK WORD ETHOS, WHICH MEANS CHARACTER OR MANNERS. BUT UNFORTUNATELY ETHICS IS COLLAPSING IN EACH AND EVERY SPHERE OF LIFE, SO TEACHING THIS FUNDAMENTAL WAY OF LIFE IS THE NEED OF THE HOUR.

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As ethics are widely used in both business and professional context, the definition of ethics is further extended to include the following meanings: • Business ethics can be defined as a form of applied ethics that examines ethical rules and principles within a commercial context; the various moral or ethical problems that can arise in a business setting; and any special duties or obligations that apply to people engaged in commerce. • Professional ethics deal with the myriad of practical ethical problems and phenomena, which arise out of specific functional areas or in relation to recognised professions.

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WHAT A

BRAVE NEW

WORLD IT IS TO BE:

THE DEMOCRATIZATION

OF BANKING AND

FINANCE THROUGH

TECHNOLOGY!

MUFADDAL IDRIS KHUMRI

he payments and banking industry is witnessing a new kind of disruption in the nature of fintech companies. Banks are becoming vulnerable to mobile phones and cheap data processing. The new generation trusts internet-based providers more than banks and more than a third of millennials donâ&#x20AC;&#x2122;t need a bank account. Top Silicon Valley firms have more than 8 billion accounts! Non-financial services entities are introducing technologies that makes them disintermediate traditional financial institutions and instead become intermediaries in the payments and banking space. They cover the entire value chain of financing, investing, insurance, money transfers and merchant payments largely through the use of mobile phones, online services and wallets.

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Overall mobile money has played a significant role in driving financial inclusion and has democratized financial services. Once inter-operability becomes the norm in mobile money, it would open up new frontiers. Today an estimated 1.7 billion people are outside the ambit of financial services and the aim remains to get them included over the next decade. These successes have been replicated in other Asian and African countries. Alipay and WeChat pay in China, Paytm in India and BKash in Bangladesh to name a few.

BANKING ON MOBILE MONEY

The digitisation of cash and transactions has come with intermediaries, accompanied by a massive technology upheaval that has just begun impacting the financial services industry. It has begun with payments but will slowly spread its entrails in to every sphere of consumer and corporate banking. The lethargy of banks to innovate and reach out to consumers and merchants has led to technology players unleashing the rebellious wave of unmatched convenience with low cost alternatives. Today we have innumerable examples of how telecom players, mobile manufacturers, online shopping giants and their ilk are replacing traditional players. And all of these interesting developments are not merely happening in the so-called advanced economies but right across all economies from Asia to Africa and from Latin America to Eastern Europe. Some of the most eye dropping innovations have taken placed in some of the poorest economies. In Africa, only 25% have bank accounts (globally quarter of all bank accounts are inactive), whereas 80% have mobile phones. This has led to the phenomenal success of Mpesa and Mshawari in Kenya. Mobile money has increased consumption, created a merchant acceptance ecosystem, thwarted embezzlement of salary payments (78% of world’s unbanked adults who receive wages in cash have a mobile phone) and facilitated transfer of aid money/government subsidies.

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Paytm has more than 350 million users and growing, and have even set up a payments bank. Bkash has over 30 million registered users. In Pakistan, only 24% of adults have bank accounts, 7% use other forms of financial services and 24% are serviced informally. Easypaisa and jazzcash have an 85% market share in mobile money in Pakistan. In China, Alipay and WeChat have more than 1.5 billion accounts, dwarfing the global mobile money market for all countries put together. Mobile money transactions in China have surpassed the combined volumes of mastercard and visa, globally. ANT Financials, which owns Alipay, is valued at US$ 150 billion, more than HSBC and Goldman Sachs. Alipay has started paying interest on left over cash in mobile wallets, thereby encouraging customers to transfer money from their bank accounts. It currently holds more than US$300 billion in its money market funds making it one of the globe’s biggest fund. One shouldn’t for a moment feel that financial inclusion is not required for rich nations. About 44% of Americans find it difficult to meet an expense of US$400, whereas 40% of UK’s working population has a saving of less than 100 pounds. Nearly, a third of Americans are not credit worthy. These numbers call for us to work for a more just and inclusive financial system across the globe. FINTECH SPARKS A NEW REVOLUTION

The fintech players are akin to the new French revolution that promises Liberte, Egalite, Fraternite (liberty, equality, fraternity) to all participants.

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In financial parlance, liberty stands for the freedom to choose alternative payment and financial platforms, equality is the ability for people from all strata of society to access the platform (financial inclusion) and fraternity is to create an ecosystem of consumers and merchants who thrive in the usage of the payment and financial services platform. One sincerely hopes that once these intermediaries become behemoths in their own right after displacing banks (some of them already have like Alipay and WeChat), they wouldn’t turn into oppressors akin to the existing banking system that treats customers with excessive charges, high lending rates, low savings rates and the not so credit friendly policies for the not so privileged sections of the society. The conundrum of charging higher interest rates to low income earning segment has been the harbinger of the banking system, all in the name of risk and return. There couldn’t be a more unequal, discriminatory and bourgeois method. Banking hasn’t changed much from the days when the messiah Christ drove away the money lenders form the temple of Solomon. These money lenders and dispensers of credit still occupy the highest offices in the corporate world, whilst the proletariat awaits their fintech messiahs to unseat and banish them in the wilderness of impoverishment. Now coming to the question of displacing banks. Is this viable or even remotely possible or do we foresee a future where banks would not remain as we see them today. In a digital world, banks may end up becoming dumb pipes designed and managed by others. And loads of them have legacy systems that remain unwieldy for changes. Maybe fintech’s and regtech’s may do what email did to post offices. It is for certain that the near future will witness a series of epoch-making events that would distance banks from consumers and merchants, thereby increasing their dependency on intermediaries. Banks fear digital platforms, the colossus where consumers spend most of their time (e-commerce portals, search engines and social media platforms). It is no coincidence that Facebook and Google control more than two third of all ad revenues in the US.

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FUTURE OF BANKING LIES ON FUNCTIONALITY & TRUST

Consolidation of banks is creating banking behemoths; which is not what consumers would ideally want to see. Big banks loose touch with their consumers as consumers they become one amongst the millions who adorn their balance sheet. Retail banks have become rapacious in their attempt to wean more dollars from customers. Indiscriminate lending, higher fees and interest rates, backed by mis selling is hurting many consumers. Banks want to increase fee income and for that they sell third party funds, insurance and other assets without ideally understanding the risk and return appetite of customers. Greed is what will eventually drive consumers away from banks and toward retail fintech establishments who promise them accounts, payments and lending at an affordable cost. In order to succeed fintech should not be led by ambition of financial greed rather by an astute vision to provide distinct customer experience. Regulators would need to instil self-regulation as new laws would have to be incorporated to monitor these platforms. Most fintech intermediaries today do not possess a banking license nor do they have requisite capital to support business expansion or risk measures to adroitly measure and contain risks.

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WE ARE ON THE CUSP OF CHANGE. THE ADVENT OF ARTIFICIAL INTELLIGENCE COMBINED WITH THE SPEED OF IMPLEMENTATION WOULDN’T TAKE TIME FOR THESE PLAYERS TO INTEGRATE BANKING SERVICES AND FUNCTIONALITY IN THEIR WALLET APPLICATIONS.

So, what do fintech rely upon to garner customer confidence? A dynamic combination of functionality (ease/experience of usage) and trust (security and dependability)! Thus, making functionality and trust the future of banking and payment intermediaries. It will distill the chaff from the wheat and many unworthy aspirants will fall off in the journey. One can visualise this journey in multiple stages. The first stage has already happened with more consumers and merchants enrol themselves in the ecosystem created by the payment intermediaries as digitization of cash gains ground. This is the stage of accessibility and ease where applications are populated by basic functionality to facilitate recurring payments. From Bangladesh to Kenya, and from China to the United States, we have numerous examples of payment intermediaries that have become the new messiahs. As they slowly and surely gain the confidence of their consumers who become loyal users, they would graduate in to providing value added services akin to what a bank account offers today. Globally, there are providers of such services like Revolut, N26, Monzo, Atom Bank, and Nickel to name a few. Some with or without a banking license and those without a license will have a bank supporting them. However, the advent of mobile device manufactures, telecom providers and application support providers in the realm of payments is going to be massively disrupting for banks in the future. Aided by the astounding sale of mobile devices, a shift in our habits and the commanding penetration of internet connectivity; these behemoths are eyeing the financial services sector with gluttony. Regulations too will evolve to support new players and the digital ecosystem. The launch of Samsung Pay, Apple Pay, Android Pay and the numerous wallets by telecom/logistics providers and online shopping colossus’s is threatening the banking system similar to how the barbarians led by the Germanic tribes and Visigoths threatened the Roman Empire.

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Rome eventually fell, it remains to be seen how long our financial system would hold on to these rampaging players. It is a long way yet as these wallets are too simplistic when it comes to functionality and cannot match the agility of the mobile banking applications of banks. UBERISING BANKING

We are on the cusp of change. The advent of artificial intelligence combined with the speed of implementation wouldn’t take time for these players to integrate banking services and functionality in their wallet applications. I see them evolving as the Ubers of banking, where they would connect with multiple banks through APIs and route transactional traffic to these banks through their wallets. The wallets would provide high level of functionality, matching to what banks currently provide their customers through their internet and mobile banking applications. Customers would rather choose to log in to these wallets to access or transact through their bank accounts, which would have integrated with multiple banks. Hence, offering customers a single sign on access to their multiple bank accounts within or outside the country to carry out their financial transactions. This comes with its security nightmare, but it can be overcome with cryptography. But as a whole the concept is thought provoking! Would banks share secure financial data to these platforms? They would resist but eventually customers would start demanding access. It would start with a few banks, but a deluge would happen ultimately. Open banking in the UK is a live example of how regulators are mandating banks to share account level information with other players to facilitate customers to have a consolidated view. Transactions will not be far behind. Customer allegiance is to their mobile phone. So they prefer to use the service/ wallet which they see and experience consistently more than their banks accounts. Skeptics may argue that although wallets have been in existence for long, physical cards are still preferred. However, technology market players will evolve the wallet to its next many levels displace what we have today from a standpoint of consistent evolution. Consumers will follow suit and habits will change as AI becomes the dominant force that would evolve and transform human behaviour.

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Wallets and fintech applications started as stored value credit to support recurring and regular payment transactions. New customer acquisition through IBAN and then inching on to satiating credit demands of customers. With easy availability of credit scores, KYC and AML led by biometrics, access to national IDs and online credit assessment; instant gratification for credit would become the norm. Wallets would pre-assess, obtain bank credit confirmation and pass on multiple options for customers to choose from, thereby mitigating the need for customers to go hunting for credit. For banks there is a huge reduction in acquisition cost as costly sales resources are replaced by online sourcing. All loan details and transactional data would be enabled and made available from these wallets. Then comes the sale of insurance and investment products, savings plans etc. With individuals accessing emails, social media and website for their day to day living through mobiles; mobile manufacturers have access to all these through their application. This opens up a world of pre-determined actions, where one would literally be able to influence consumers and prompt them for engagements. A receipt of a bill from your utility provider would automatically generate a payment request or in future it would simply notify that payment has been made without any manual intervention. Every conceivable predictive behaviour can be understood and executed with finesse. Banks may eventually decide not to invest in their own applications rather focus on instant disbursal and product enhancements etc. There is an endless possibility of this intermediation that has become possible on account of the mobile revolution. Much of this is already happening through multiple applications. It just needs to be integrated on to a single platform. Revenue for the Ubers of banking would come through banks as they would pay for product sale, new customer acquisition and transaction origination. Retail banking will become a lot less profitable in the days to come and rightly so as we learn to live in a more just financial world.

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THE QUEST FOR AN EQUITABLE WORLD OF BANKING & FINANCE

As I foresee, customer experience provided by fintech entities would make them repositories of customers. Banks would vie to offer products and customers would choose the best option. This will pressure banks to lower margins, fees etc. Customer acquisition will become the forte of these new platforms. They could be wallets, social media platforms, financial aggregators, stand-alone financial platforms with no physical presence or even telecom or tech companies. Many such entities have started offering a conduit to perform financial transactions. Consumers will demand ergonomically efficient services and access. Trust will fundamentally alter as customers expect fintech to be custodians of customer experience and repository of information, rather monies. Cyber security will become paramount and regulations will evolve to monitor these new platforms. Banks would merely become repository of products and money. The rest of all the financial functions would become the mainstay of these platforms. Hopefully the world of banking and finance would become more equitable as transaction costs would go down, operations get automated and access to services becomes easy. Responsible lending and a balanced sale of insurance and investment products will be promoted.

THE LANDSCAPE IS BOUND TO BECOME REBELLIOUS AND A BRAVE NEW WORLD IS ABOUT TO EMERGE, AND IT MAY JUST NOT BE DYSTOPIAN! TECHNOLOGY WILL BE AT ITS FOREFRONT.

But it doesnâ&#x20AC;&#x2122;t end here. With the experience garnered by these players and shifting regulations, there is a possibility that some of mobile device manufactures, e-commerce megaliths, telecom or logistic service providers and application support providers in the realm of payments might apply for a banking license, ultimately becoming banks themselves leading to the displacement of the existing financial services providers. Disintermediation of financial services aided by a lower cost of technology is essential to pass on value to consumers. Product cost and margins have to get lowered and that is what will happen as alternative banking would gradually take over. The landscape is bound to become rebellious and a brave new world is about to emerge, and it may just not be dystopian! Technology will be at its forefront.

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Some institutions would use API connectivity to open up to third parties, others would develop themselves, and some would re-create themselves by building a new infrastructure and ecosystem. All in all, if institutions are not agile, they would lose customer trust, brand value and visibility. Data security concern by regulators and customers may limit ambitions of large institutions, as such they would have to build more complex platforms to integrate existing systems and would not find it easy to take on fintech. Rather most would collaborate and co-exist leading to a shared economy.

ONLINE COMMERCE HAS TAKEN AWAY HUMAN TOUCH IN SHOPPING, FAMILY OUTING, NEIGHBOURHOOD GROCER, AND THE PLEASURE OF LIVING WITH LESS. COMPUTER OPERATING SYSTEMS, APPLICATIONS, DATA STORAGE ARE DOMINATED BY DOMINEERING LARGE ENTITIES.

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The innovations that we spoke about will be aided by technological advancements in Artificial Intelligence led by algorithmic advancements, machine learning through neural networks, pooling of big data to facilitate data cum behavioural science and data analytics, use of robotics to execute repetitive tasks to enhance accuracy, predictive analytics to offer customized customer solutions, increasing penetration and usage of mobile phones, use of distributed ledger technology, cloud computing to lower system costs, use of biometrics for digital identity authentication, Regtech to implement, monitor and analyze regulatory norms and to detect frauds, digital onboarding of customers, digitization of back end processes and operations (moving infrastructure and ecosystem from analog to digital) and sprucing cyber security to thwart cyber-attacks. If all the above-mentioned technological advancement werenâ&#x20AC;&#x2122;t enough, we will have to deal with over 25 billion connected devices over the next five years. The possibilities that Internet of Things (IoT) would throw up in the payment and financial world is mind boggling. The possibilities are endless, and innovation would touch the roof. Each of these would chisel a new and exciting future for the human species. And the sheer pace of change and advancement in each of these areas would make technology adaptation a challenge.

However, such a world comes with its own shortcomings by way of information asymmetry and moral hazard. An epoch is in the making as we move ahead with technological advancement and are faced with the choice of plenty to deal with. At the same time we have to face the increasing instance of monopolies that could rule our lives. We are consciously losing our right to choose and support small businesses. We are dictated by global entities who out price, marginalise and muzzle smaller players in the name of economies of scale and bizarre management jingoism in the name of liberal business ethos. RISE OF THE GIANTS

An instance in the making are the technology and e-commerce giants who have spread their tentacles in our lives with such devastation that we are losing our ability to imagine, enquire and question. E-commerce giants have grown with unhindered pace, muzzling out small retailers and dictating terms to manufacturers. Big tech giants are creating barriers to entry by controlling data. Facebook has user profile and behavioural data, Amazon has pricing information and Google sits upon vast reserves of data accumulated over every search request. The big five (Apple, Amazon, Alphabet, Facebook and Microsoft) have made homo sapiens into exploitable assets. Online commerce has taken away human touch in shopping, family outing, neighbourhood grocer, and the pleasure of living with less. Computer operating systems, applications, data storage are dominated by domineering large entities. Uninhibited use of data has imprisoned us and our actions. The strangle hold of the powerful corporates is bedazzling. They acquire, suppress and assimilate competition and do not allow a parallel though process to evolve.

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Social media influences us such that we are slowly fading in recognizing ourselves. We are fed feeds and opinions that has robbed us of our imagination. Our very character and individuality are being obliterated. Search engines dominate our ability to comb for information and reading is synchronized to reflect dominant opinions. Information is available so easily that reading elaborate books and referring to bibliography is outdated, rationality replaced by herd mentality and imagination has been countered by dictatorial homogeneity of inquest. The internet has increasingly colonised our minds. We have become prisoners of the internet visual, text and audio content. Our brain is being increasingly hacked, and societal disconcert will increase as we pass on increasing data about ourselves; be it behavioral, social, biological and emotional. Our actions will be determined by intelligent machines that would dictate our next moves. Human intelligence will become artificial by the onslaught of machine intelligence and algorithms. Our attention span is getting decreased and we are addicted to our mobiles. We are isolated in a social world and increasingly every human in the crowd is a solitary soul. We cannot live being ignored and that weapon is being increasingly used against the human species. Imagine living your daily routine whilst you are largely ignored by the world surrounding you. We are being measured by our diminishing marginal utility to society and work. Regulators and governments globally have to step in and promote the concept of small being rational and viable. Big is arduous, takes away mobility and leads to creation of behemoths. Remember, the age of the dinosaurs, they became extinct as they couldnâ&#x20AC;&#x2122;t harness mother nature, nor could they adapt themselves to an external celestial collision. Let us not create dinosaurs amongst our businesses, financial institutions, economies and commerce. Let the sparrow breed and thrive, the chirpy nature of a small world is much more beautiful, all-encompassing and more compassionate. Most importantly we as individuals have to support and promote small businesses through our buying habits so that we create a thriving ecosystem that would allow them to prosper.

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Today we are aping it in business, by allowing the rise and domination of behemoths. Just the way we have realized that bigger the financial institution, the greater is the risk of systemic failure, so also any corporate, if it outgrows beyond a certain level becomes so dominating that it controls every element of human lives. The monopolistic restrictive trade regulatory authority was formed to check the unhindered growth of businesses. It is time to enforce it globally and restrict the unhindered ambitions of big corporates. Uninhibited power leads to corruption of a different level, it leads to encircling us in an unending game of slavery, as we are forced to live and die on terms dictated by others. Power has gone wild and its influencers are drunk on its elixir. Questioning the obvious is not to stop or molest technological progress, but rather create a munificent atmosphere for human progress and survival of our race. After all we are inheritors of a Wonderful World and we want to leave a much more wonderful world for the future generations.

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TO SUM UP THE TECHNOLOGICAL CHANGES THAT ARE TO OCCUR IN THE NEAR AND DISTANT FUTURE, I WOULD LIKE TO SHARE A QUOTE FROM JONATHAN SWIFT, AUTHOR OF GULLIVER TRAVELS:

VISION IS THE ART OF SEEING WHAT IS INVISIBLE TO OTHERS.

I would have loved being a wanderer and at times a solitary reaper amongst the highlands. But maybe I lack the mettle to walk my talk. I ended up being a banker and for 23 years remained comfortably ensconced in the world of finance and payments. Yes, banking was fundamental and pedestrian but with the advent of technology all that is up for change! And I am ready to take the plunge in to unchartered territory. The last 15 years have been spent in the UAE, where I headed and established two Islamic banking windows at ADCB and RAKBANK. I then moved on to head consumer banking products and card business for RAKBANK. My life as a banker started with ICICI Bank in India, where I spent the initial 8 formative years of my career before moving to the Middle East. I have recently resigned from my job to look for an exciting prospect and am willing to pack my bags for a travel in to the world of Fintech. Apart from banking, I love gastronomy, and have a fondness for the culinary arts, music, poetry, philosophy and romanticism.

MUFADDAL IDRIS KHUMRI

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2019 THE LEADING ISLAMIC FINANCE PUBLICATION SINCE 2010

THE MOST AUTHENTIC SOURCE OF INTELLIGENCE IN ISLAMIC BANKING AND FINANCE WITH NINE MOST AUTHENTIC AND WIDELY RESPECTED ANNUAL REPORTS, THE GIFR HAS GAINED RECOGNITION AND ACCOLADE FROM THE ISLAMIC FINANCIAL SERVICES INDUSTRY, INCLUDING LEADING ISLAMIC FINANCIAL INSTITUTIONS AND POLICYMAKING BODIES. THE 10TH EDITION OF GIFR CARRIES THE THEME “ARTIFICIAL INTELLIGENCE AND INNOVATION IN ISLAMIC FINANCE”. THIS THEME WAS CHOSEN TO HIGHLIGHT THE TRANSFORMATIVE POTENTIAL OF ARTIFICIAL INTELLIGENCE IN ISLAMIC FINANCE AND HOW THE INDUSTRY CAN HARNESS INNOVATION TO DRIVE SUSTAINABLE DEVELOPMENT.

CONTENTS Digital Transformation of Islamic Financial Institution: A Global Survey on the State of Readiness and Influencing Factors

Artificial Intelligence Applications in Islamic Finance Industry

Enhancing Legal & Regulatory Framework for Islamic FinTech Development

The Impact of Technology, Innovation and Artificial Intelligence on the Current State of the Global Islamic Economy

Harnessing Fintech Innovation for Sustainable Growth in Islamic Finance

Shari’a Analysis of Cryptocurrencies and Bitcoins The Race to Be the Global Islamic Fintech Hub

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