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slamic finance is one of the fastest growing segments of global emerging markets. However, the market is far below its potential. Over the last two decades, the total volume of Islamic financial assets has grown by 15 to 20 percent a year.

Islamic finance assets are projected to grow to US$3.2 trillion by 2020, with Islamic banking reaching $2.6 trillion (Thomson Reuters’ projections). The growing popularity of Islamic banking and finance and its increasing global outreach has led to a considerable undersupply of talent in the sector.

Estimations are that there is a shortfall of between 8,000 and 10,000 in core Islamic finance fields, plus more in peripheral sectors such as law and regulatory affairs, financial technology, insurance and others. Altogether, as the industry continues to grow, at least 56,000 people will be needed to serve the Islamic financial sector in the coming years.

The Fourth Industrial Revolution” (Industry 4.0) is the notion of an industrial revolution that will alter the way we live, work and interact with one another, including how we utilize and deploy highly disruptive technologies such as artificial intelligence, robotics and blockchain technologies. This impact is clearly evident in the banking and financial industry. Disruptive technologies force virtually all industries to fundamentally revise their business models or even define new ones.

The challenge for Islamic financial institutions now is to put in place a flexible and robust business model that is relevant and efficient, while keeping intact the sanctity of sharia governance and sharia compliance within the changing landscape of banking and financial technologies, and the increasingly loud call out for banks to be more ethical and value-based. This transformation of the work environment will change the job profiles and therefore requires employees to be outfitted with a wide range of competencies.

There are at least five sets of competencies to make a successful Islamic financial talent factory in the Industry 4.0 era, namely sharia expertise, innovation and product development, technical Islamic financial knowledge and skills, technology and digital savviness as well as data analytics.

First, sharia expertise. The supply of banking and finance practitioners with a good understanding of sharia remains one big challenge to the Islamic finance and banking industry. Banking practitioners may have attended many seminars and workshops on Islamic banking, but they are not trained to deal with sharia-related problems in the banking business. Doing so requires an intimate knowledge of sharia.

There is no shortcut but to pursue formal education in Arabic, usul-fiqh, fiqh muamalat, etc is mandatory. Many banks turn to people with sharia degrees for advice, but their understanding of economic principles and how banks operate is suspect. Sharia experts have categorically approved new financial instruments with less idea how that would impact bank’s earnings, consumer welfare, economic stability and income disparity.

Second, innovation and product development. Responsible innovation should assist in the transition of the industry from being legally sharia compliant to demonstrate the impact of a sharia-compliant system on individuals and economies. This is a daunting task for an industry that has, to-date, barely managed to modify conventional products to meet Islamic legal requirements.

Third, technical Islamic financial knowledge and skills. A comprehensive perspective on the financial aspects of the Islamic economic system is a primary limitation today. Governments, regulators and industry leaders in influential positions need to promote the emerging class of professionals who understand and possess substantive knowledge of sharia and modern economics and banking systems.

Simply put, the industry needs to invest in developing exceptional future leaders. Such programs normally provide a full range of Islamic finance subjects, including Islamic capital markets, Islamic financial systems, Islamic banking operations, Islamic corporate governance, public finance, accounting and auditing.

Fourth, technology and digital savviness. It is time for Islamic financial institutions to think about how and where they can advance their digital strategies beyond the utility of transactions and payments. Where should Islamic banking providers focus their digital investments once they have tackled the full digitization/mobilization of checking accounts? How can they use digital channels to build stronger customer relationships, and what will be key to retaining more customers? What should their digitization strategies look like in the next three to five years? Customers are keen to adopt newer technologies. They are not only rapidly adopting digital banking solutions. They are also giving feedback on how to improve those technologies.

Fifth, data analytics. Data analytics are applied extensively in marketing, credit policy and risk management. Analytics are applied heavily to understand customer behaviors and preferences as well as being deployed in credit assessment. Analytics-based credit assessment could create a robust credit scoring system that leverages its vast online transaction data in combination with other offline data.
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