Challenges ahead for Islamic banking sector
By Gan Yen Kuan
Islamic banking in Malaysia is still in its infancy and there is a long way to go to achieve full convergence of thoughts and priorities, said RHB Islamic Bank Bhd chairman Datuk Vaseehar Hassan Abdul Razack.He said yesterday that the three main challenges that players and academics in the Islamic banking sector should address were whether the players were ready for the long haul; the lack of true Islamic banking products and availability of adequately qualified people.
Vaseehar said the players did not seem prepared for the challenges yet, despite the government’s efforts to make Malaysia the international centre of Islamic finance.
Delivering the keynote address at the 4th International Islamic Banking and Finance Conference in Kuala Lumpur, he said: “Currently, there does not seem to be conviction, especially among players from the West. Many are just opportunistic – coming in with full force when opportunities for quick gains arise, and withdrawing quickly when the market is down.”
He said it was essential to get the conviction of all parties going forward.
Vaseehar also highlighted the lack of true Islamic banking products, citing that the current trend was to take a conventional banking product, make a few cosmetic changes, and sell it as an Islamic product.
There is a “need to come up with entirely new and more innovative products that are truly Islamic”, he said, and called for more research in this area. He said there was a need to stop basing Islamic products on conventional banking products.
Pointing out that many current Islamic bankers were still thinking like conventional bankers, he said there was a need for “people who can think outside the box, think differently”.
“Board members and management staff should have broad industry knowledge,” he said, adding this problem had impeded the development of Islamic banking.
Vaseehar also said Islamic banking institutions must be prepared to accept foreign expertise, even at board and senior management levels.
