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Does Islamic finance need you?

Summary

25 July 2012 updated 10 March 2013

I am often approached by young Muslims who wish to make a career in Islamic finance. I regularly find myself saying the same kind of things in response, since the question is a fairly generic one. Earlier this year I gave a talk with the title “Does Islamic finance need you?” at a conference on careers in Islamic finance hosted by the London office of the international law firm K & L Gates LLP.

This page is based upon the slides that I used for that talk. The main focus is on the United Kingdom although the issues will be similar in other non-Muslim majority countries. The market dynamics are different in Muslim majority countries such as Malaysia or the GCC since Islamic banks there can take on and train graduate entrants.

I spoke on the same subject at the CASS Business School of City University in London on 19 February 2013 and updated the employment figures for that talk.

The demand for jobs in Islamic finance

There are an increasing number of UK universities which offer master’s degree courses in Islamic finance. Understandably students who have invested the time and money taking such degrees often wish to pursue a career in Islamic finance.

There are also non-university qualifications in Islamic finance such as those offered by the Institute of Islamic Banking and Insurance, The Chartered Institute of Management Accountants and The Chartered Institute of Securities and Investment. While some of the people taking these qualifications already work in the industry (for example staff at accounting firms who wish to deepen their Islamic finance knowledge) in many cases the people taking these qualifications have no prior industry experience, but instead undertake the qualification as a way of seeking entry into the Islamic finance industry.

Accordingly there is a significant and growing demand for UK-based Islamic finance jobs.

The supply of jobs

The supply of jobs in the UK Islamic finance industry is surprisingly limited. To prepare for my talk I looked at the most recent published accounts which I had available for the five stand-alone UK Islamic banks for details of their staffing levels. They are set out in the table below. (The table has been updated using figures from the 2011 accounts of the banks.)

Bank

Headcount

Bank of London and the Middle East

77

European Islamic Investment Bank

18

Gatehouse Bank

32

Islamic Bank of Britain

118

QIB (UK)

37

Total

282

The above figures represent the total headcount of the banks listed. When they were newly established the banks were building up their staffing levels but for several years now the banks have been in a relatively stable staffing position. The accounts do not disclose staff turnover but if it was, say, 10% then they would only need to recruit a total of 28 people a year between them.

As well as the stand-alone Islamic banks, the Islamic finance industry in the UK also employs a significant number of people in "window" operations (where Islamic banking is offered by conventional banks such as Lloyds TSB or HSBC with its Amanah finance division) and the structured Islamic finance desks of investment banks etc. Unfortunately no headcount data is available but even if including such operations tripled the size of the industry that would only make it around 1,000 bank employees, requiring say 100 replacements each year if there were 10% staff turnover. Furthermore, most replacements would be found from within the industry rather than from new entrants.

The overall message is that the total number of new entrants into the UK Islamic banking industry each year has to be very small, and is likely to be far smaller than the total number of people obtaining Islamic finance qualifications each year.

Islamic finance jobs, as such, do not exist

The most serious misunderstanding of the students who obtain Islamic finance qualifications is that they believe there is such a thing as a generic job in Islamic finance. In reality a generic Islamic finance job does not exist just as there is no such thing as a generic conventional finance job.

Instead financial services firms (whether conventional or Islamic) employ specialists. In my talk I listed just a few of the types of specialists that are required. Apart from Shariah experts who are required only by the Islamic finance industry, the other categories are required by both Islamic and conventional finance firms.

Accordingly if you wish to be hired by an Islamic bank, you need to obtain specialist skills that are in demand.

Some such skills can be acquired by choosing appropriate university degree subjects or by obtaining professional qualifications such as becoming a chartered accountant. However the most useful training and experience can be gained by working for a conventional bank, either as part of its graduate trainee programme or later on in a specialist role such as working on its equipment leasing desk.

Some Muslims have religious views which preclude them working in a conventional bank. Unless they have other relevant specialist qualifications such as being a chartered accountant, they are unlikely within the UK to be able to acquire the specialist skills that would make them employable by an Islamic bank.

In particular, unlike UK conventional banks, the UK Islamic banks are too small to offer graduate training programs which might take new graduates and develop them into bankers.

Concluding comments

I summarised my talk into three key points that aspiring entrants into Islamic finance needed to think about.

  1. There is no such thing as a generic Islamic finance practitioner.
  2. What is your area of expertise?
  3. How are you going to acquire that expertise?

I returned to the above subject in a piece I wrote for Simply Sharia to coincide with the World Islamic Economic Forum in London in October 2013 which is on my website page "Career prospects in Islamic finance in the UK."

 

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