Those with limited knowledge but some awareness of the subject of Islamic finance would have learned much from a conference held recently in Lahore, a global forum organised jointly by COMSATS institute of information technology and its partner university in Lancaster, UK.

Certainly, my own modest understanding, based on a mixture of exposures in banking, then subsequently media and research, was aided by the insights of delegates from academia, practising institutions and advisory bodies.

At the same time, it was clear that key issues persist for participants seeking to spread recognition of the sector, its foundations, and its scope to offer a worthy and viable alternative to conventional banking, whose operational and ethical weaknesses became notoriously exposed in the global financial crisis.

In particular, several noted the industry’s potential for supporting the unbanked, poorer groups in society, and SMEs. Microfinance has become an increasingly established theme in this regard. Equally, certain panellists spoke of the need to clarify confusions still as to how the Islamic economy should operate and develop its appeal.

Collaboration

The event, the second in an annual series, benefited not only from the extensive range of representatives and their variety of experience and offered topics, but from one further and critical factor — namely the exchange and confluence of ideas from different segments of the sector, whether researchers, or regulators, or from the world of business.

Any opportunity for dialogue between such parties, with the chance of complementary perspectives, surely has to be welcomed, with their interaction helping to resolve the inhibitions still curbing Islamic finance’s adoption in broader markets. Indeed, collaboration was a keyword filtered into the assembly, not least because of the sheer scale of the opportunities among a range of audiences and customers around the globe.

While a Gulf readership would be well aware of the various centres within and beyond this region — seeking either to claim a niche in the Islamic finance industry or, in the case of Dubai, to offer an all-encompassing platform for both financial and non-financial endeavours — some may not be so aware of Pakistan’s story in this field, as a country with the world’s second largest Muslim population.

Having previously made only modest ground in establishing Islamic finance in the 1990s, Pakistan has since emerged as one of the nations looking to embrace the tenets of Sharia-compliant banking and finance, not only for its nurturing at home, but to be among the community that may coalesce to give it critical mass internationally as well.

Testimonies

Given the relatively delayed efforts locally to promote the Islamic finance sector — now embraced in tandem by government and the central bank — a number of those attending this global forum gave learned and often heartfelt testimonies on how the industry has to put itself forward to gain due attention, advertising underlying principles to distinguish the merits of risk-sharing by contrast with the speculative excesses witnessed in conventional banking.

Indeed, while some of the ideas shared were viewing the issues conceptually, most were concerned with the strategic steps the industry has to take to gain a stronger foothold on the world stage.

For instance, one speaker referred to “co-operation and generosity” on the one hand, as founding precepts to follow, as against the “competition and greed” that seems to have characterised traditional banking in the West. In response, another argued from the podium that, in terms of aligning with customer-centric service, it is not competition per se that is the trouble, but the necessities of transparency and fairness.

In making that case, Khalid Al Fakih, CEO of Bahrain-based AAIOFI, further emphasised the importance of trust and confidence in any system, of securing the basis for financial stability, of underlining the linkages between Islamic economic sectors, and of the abiding protection of consumers.

Relatedly, as regards regulation, the argument was put during discussion that Islamic finance needs to function on a level playing-field with its conventional counterpart, and potential users of its products and services be educated as to the availability of choice.

Better branding

That observation brought one prominent theme to the fore; in the words of one experienced banker that Islamic finance “has to market and brand itself better”. That might be a twofold project, insofar as it requires Sharia-compliant bankers to capture the attention of potential customers in the market, but also that the responsible authorities provide the enabling legal, infrastructural environment.

That being so, a Malaysian official observed that governments have to lead the way, and, in so doing, would best serve the sector’s aspirations by putting national pride aside.

With the relevance of globalised trade and standards taken as read, that call to coordination was not only impassioned at this particular gathering, but has become a recurrent and resonant note among interested parties from one event to the next. The forum itself was a cross-border exercise. Thus is awareness enhanced and its coherence encouraged and amplified.

The author is a freelance writer and visiting fellow of Lancaster University, UK.