Islamic Finance: The New Regulatory Challenge, 2nd Edition

Chapter 23

Human Resource Management of Islamic Banks: Responses to Conceptual and Technical Challenges

Volker Nienhaus

1. INTRODUCTION

The Islamic finance sector continues to grow rapidly. Initially, the growth was driven by increasing transaction volumes of a rather small number of Islamic banks. Since the early 1990s, the number of Islamic financial institutions and the total customer base increased considerably, and the last decade saw the establishment and expansion of Islamic windows, Islamic subsidiaries of conventional banks, and the conversion of conventional into Islamic banks. In addition, global conventional players designed Islamic products for high-net-worth individuals and for institutional clients. The competition among Islamic banks and between Islamic banks on the one side and Islamic windows and products of conventional banks on the other side has been intensified substantially, with quantitative and qualitative human resource implications for Islamic banks: they need more and better-qualified personnel, which still is in short supply.

Given the competitive situation, the high growth rates of past years, the experiences of the recent financial crisis (which did not leave Islamic financial institutions untouched, albeit to a lesser degree than their conventional counterparts), and the specifics of Islamic finance, the human capital requirements are particularly high—in product development and product placement (in retail as well as investment banking), but also ...