SPECIAL COMMENT: Dad, Why Islamic Finance?

By Rushdi Siddiqui, Head Of Islamic Finance, Thomson Reuters

My children, son (14) and daughter (11), asked a straight-forward two-part question as part of their homework assignment on parent career choices: why did you chose Islamic finance? Will you retire in Islamic finance?

At surface level, they seem to be easy questions, but they are more difficult to explain than stock screening or writing about Shariah compliant risk.

QUERY: Are there programs/courses for children of parents in Islamic finance to train next generation?

Entry to Islamic Finance
Today there are more roads leading to Islamic finance, but for those of us who got into this space in the mid 1990s, especially living in the west, it was not about the money, but an interest, a cause or an (job) opportunity to get into something during the post formative stages of development, i.e., after establishment of IDB, DIB, KFH, Albaraka, Tabung Haji, etc.

All of us, in one way or another, want to leave a legacy behind for the ‘village’ that raised us, and Islamic finance, being embryonic, better affords that opportunity, even today. Put differently, conventional finance and capital markets are older, more developed and efficient vis-à-vis Islamic finance, hence, less opportunities to make a mark.

For example, over the years certain people have been equated for achievements at certain institutions, even, if affiliation is no longer; Iqbal Khan (founder of HSBC Amanah), Richard Thomas (UBK), Ismail Daddabhoy (Islamic Repos at UBS), Governor Zeti Akthar Aziz (Islamic central banker), Michael McMillian (SPVs for Islamic structures), and people have equated to me to Islamic indexes (Dow Jones Indexes).

But, there has to be due credit given to (western) conventional institutions, especially non-banks, that have embarked upon addressing the needs of the Islamic finance marketplace. To them, its not about religious sentiments, but new market opportunities, as many of their existing markets are mature and saturated, hence, eroding margins.

For Islamic finance, the credibility issue is neatly addressed when institutions like S&P, Thomson Reuters, Clifford Chance, and PWC enter the space, as these global brands will not risk tarnishing their brands without due diligence on a sizeable opportunity. And their decades of experience is the need of the hour for this niche market to become ‘conventionally efficient and competitive.’

Thus, I got interested in Islamic finance after I read an article in The New York Times, thought it was amazing to have a system based upon merger of faith and finance, and then saw a Tombstone Ad in the FT about a deal closed by The International Investor (Kuwait). I wound up at an index provider after I pitched the idea about being the world’s first index provider to have an Islamic equity index, and they saw an opportunity for licensing revenue with Islamic indexes.

Exit from Islamic finance
Once people get into Islamic finance they may job hop from one Islamic finance entity to another, usually based on compensation during the pre-crisis days, while others stay at one firm until a sense of accomplishment of the vision or retire. So, for career Islamic finance people, its all they know and its how they are generally type-cast/labeled.

QUERY: Do non-Muslims in Islamic finance encounter the same labeling issue? Is it easier for non-Muslims (than Muslims) to go (back) to conventional finance, or is this too broad a generalization question?

QUERY ll: What about a Shariah scholar leaving Shariah advising or changing profession to become an Islamic banker or lawyer? Muddassir Siddiqui, no relations, is a good example of scholar turned scholar/lawyer. Is this a possible avenue for scholars going forward?

So, what kind of second career Islamic finance people land? For example, Iqbal Khan, HSBC Amanah founder, is now founder/CEO of Fajr Capital, Hussein Al Qemzi, previous CEO of Sharjah Islamic Bank, is CEO Of Noor Islamic Bank, and I went from being a Global director at Dow Jones Islamic Index Group (10 years) to Global head of Islamic finance & OIC Countries at Thomson Reuters.

The second career in Islamic finance is about a fire in the under-belly. It’s a continued commitment to possibly (1) right some wrongs, (2) finish what you started, (3) make a difference, (4) pierce the Islamic ‘glass’ ceiling, or (5) desire to go back to an unstructured environment to create value.

Career in Islamic finance is like raising a child; bumps, bruises and challenges at different ages, but also achievements and accomplishments along the way to adulthood. We get into Islamic finance for a cause and it becomes a causeway to a career.

The opinions expressed on this website represent those of individual authors