I was fortunate to be part of Bold Talks 2011, a conference about people who have had their human spirit tested and overcame their breaking points. In attendance was Moazzam Begg, an ex-Guantanamo Bay prisoner, Terry Holdbrooks, an ex-Guantanamo Bay guard who converted to Islam, and Philip Zimbardo, the globally recognized Stanford University professor known for the Stanford Prison experiment.
That experiment was a study of the psychological effects of role-playing as prisoners and prison guard, and showcased the eventual abuse and ensuing torture towards the weak when there is absolute power without accountability. Obviously, these three speakers could draw and command the emotional attention of any audience in almost any part of the civilized world with their real-life touching experiences.
I was asked present on Islamic finance in the context of the “human interest” or “public good” aspect of this niche market. But a presentation on the prohibition of interest and the history of Islamic financing was not going to magnetize a large, emotionally charged Generation Y audience.
While Islamic finance is theoretically about social justice, equity and fairness, the inclusion of the financially disenfranchised, and stewardship of the environment, this was not going to captivate the audience’s attention.
However, it’s humour – not money – that ultimately builds bridges between people of different ages, interests, ethnicities, religions, and backgrounds. I suggested to the audience that:
1. If Islamic finance was a fruit, it would be a Durian. Some love it and some hate it.
2. If Islamic finance was a vehicle, it would be a steam engine. Noisy, slow, steady, but will get you to your eventual destination
3. If Islamic finance was an actor, it would be Bruce Dern. Great talent, but he always gets role of the bad guy.
4. If Islamic finance was a gadget, it would be the mobile phone. An excellent invention, but one that must continually reinvent itself before going obsolete.
But my presentation on Islamic finance could not be 30 minutes of stand-up comedy. There simply was not enough material to fill the allotted time.
While the presentation received only polite applause, the Bold-Talks event raised an important question for Islamic finance and the halal food industry: What is the Islamic finance story that will bind today’s and tomorrow’s generations together?
After listening to photojournalist Joy Tessman speak about the BP oil disaster of 2010 in the Gulf of Mexico, I soon realized that the story was the environment. Today, not one Islamic bank is member of the Equator, Carbon and/or Climate Principles. Yet the GCC has one of the largest carbon footprints on the planet. Additionally, if we look at today’s 560-plus Islamic funds, not one Islamic ‘green fund’ comes to mind.
Where is the environmental corporate social responsibility (CSR) of the Islamic finance as stewards of the earth? Islamic banks finance and fund projects and infrastructure to real estate development via syndicated loans or sukuk, but where are the appropriate environment impact covenants?
Imagine Bold-Talks 2020, where the keynote presentation is from a CEO of a financial institution that solely financed an infrastructure project in a densely populated African Muslim country encountering decades of civil and ethnic strife. He shared the emotional challenges of overcoming government corruption, lobbying various hostile tribal elders threatening his personal life, and explaining the benefits to future generations of $500 million water, education and healthcare projects that complied with Equator Principles.
Imagine that this CEO happened to be the head of the world’s first Islamic mega-bank that used long term sukuk financing which was oversubscribed by pension funds, hedge funds, and family offices in G20 countries. It not only showcased the return on investment (ROIs) for investors but, more importantly, exhibited the human interest of Islamic finance.
Today’s youth want to lead or be part of ‘impact investing.’ If Islamic banks are not prepared to move from murabaha, then depositor democracy will not only punish them with withdrawals, but also encourage local conventional banks to take the lead. The excuse of an embryonic stage of Islamic finance carries less weight each passing day in their eyes.
During recent travels to the UAE, Bahrain, Malaysia, Indonesia and few other Muslim countries, I believe I met the future social ‘faces’ of Islamic finance. This borderless generation is not contented with the bylaws of their father’s Islamic bank. They want the option of CSR to become obligatory in order to yield social returns.
Their benchmarks are Google, YouTube, Twitter and Facebook (or GoYouTwitFace, if you will), where they use information in real time to float trial balloons of ideas to their ‘networks’ in real time. This native online population’s attention span is short and patience is even shorter (it’s all about “right here, right now”). Yet they are also filled with “Mother Theresa”-like compassion and transformational ideas. I suspect that many of today’s Islamic banks will soon be cross-examined without mercy on what makes them “Islamic” by the Muslim youth of today.
The knowledgeable and internet savvy Generation Y, using social media as their default communication mode, will not be afraid to scrutinize transparency and accountability or share and flush out transformational ideas from cut and paste ideas. Islamic banks need to not only understand the environment of their future customers but, more importantly, create an atmosphere where they are polled as the “most admired company” young people want to work for.
Islamic banks need to make themselves relevant to tomorrow’s customers, by appealing to today’s youth movements comprised of human interest, social returns and impact investing.
The ball is in the Islamic banking industry’s court. One hopes they won’t dribble off of their feet.
Rushdi Siddiqui is the Global Head of Islamic Finance at Thomson Reuters. Recognised as a thought-leader in Islamic Finance, Rushdi was a key force in the creation of the Dow Jones Islamic Index, and is now a leading advocate of the convergence between Islamic Finance and the Halal industry.