Q&A: The General Council for Islamic Banks and Financial Institutions’ new four year plan

Salaam Gateway spoke exclusively to Dr. Abdelilah Belatik, Secretary General of CIBAFI, to find out more about the new strategic plan, its objectives and challenges. The Q&A also touched on what CIBAFI saw as the biggest challenges and opportunities in the global Islamic finance industry.

Established in 2001 by the Islamic Development Bank and other leading Islamic financial institutions (IFIs), the General Council for Islamic Banks and Financial Institutions (CIBAFI) unveiled its new four-year (2022-2025) strategic plan in April.

The Bahrain-based non-profit organisation seeks to develop and promote the Islamic finance industry through activities including information and financial analysis, communication, awareness, and human resources. With over 130 members in more than 34 jurisdictions, CIBAFI is a key stakeholder in the global Islamic finance industry.

Salaam Gateway (SG): What are the goals and objectives of this strategic plan?

CIBAFI: The CIBAFI Strategic Plan 2022 – 2025 comes in succession to two strategic plans where CIBAFI has drawn a roadmap for its activities and initiatives to fulfil its mandate of supporting the growth of the Islamic Financial Services Industry (IFSI).

In the past few years, the financial industry and the global economy have been witnessing critical developments, including the rise in technology integration and disruptive trends, bringing in many opportunities for the growth of the IFSI. However, these disruptions have also brought several risks that need to be appropriately managed. Through the CIBAFI Strategic Plan 2022 – 2025, we aim to follow up on existing initiatives, with a focus on tailoring activities with global developments in the industry, including innovation and sustainability, to strengthen the international market position of Islamic finance and leverage on key growth drivers to boost the industry’s development.

This new Strategic Plan aims to achieve four strategic goals reflecting the key priorities within CIBAFI’s mission. It aims to strengthen the global position of Islamic finance by promoting its added value, developing meaningful and impactful collaborations, leveraging key growth drivers, and equipping stakeholders with the required competencies. Accordingly, four strategic objectives with key priorities have been identified to achieve these goals: 1) Advocacy of Islamic Finance Values and Related Policies and Regulations; 2) Sustainability and Innovation Integration; 3) Industry Research and Analysis; and 4) Professional Development.

SG: How will you monitor and measure the implementation?

CIBAFI: The CIBAFI Strategic Plan 2022 – 2025 relies on a 3A concept of Aiming, Assessing, and Applying to facilitate the implementation, evaluation, and communication of deliverables.

Under this mechanism, CIBAFI sets clear targets and initiatives under its four strategic objectives, reflected through annual work plans with clear and defined timelines for implementation. In addition, a continuous and periodic assessment of initiatives and projects is conducted to track the implementation process and measure the conformity of the activities with the strategic objectives and the Stakeholders’ satisfaction during periodic meetings.

Through active communication and continuous engagement with stakeholders, CIBAFI showcases its deliverables and receives feedback that allows measuring the satisfaction of members and tailoring activities to the needs of the industry for the fulfilment of its mandate.

CIBAFI activities and initiatives are reported periodically through its newsletter, the InFocus and yearly Activities Report.

SG: What will be the key challenges in achieving the objectives?

CIBAFI: The successful implementation and achievement of the CIBAFI Strategic Plan 2022 – 2025 and its objectives require the support of internal and external resources through continuous collaboration and cooperation. This includes support from the CIBAFI Secretariat, Board of Directors, Members, and thematic Working Groups through the effective participation in CIBAFI initiatives and fulfilling the necessary financial resources to achieve the purposes and objectives of CIBAFI. We are confident that the unwavering support we have always received from our stakeholders will continue to ensure the successful implementation of this strategic plan.

The industry is also changing rapidly today, and new trends and developments occur by the day. This requires a proactive approach to identifying elements of importance for the industry's growth, highlighting opportunities to boost further development. Through the 3A concept, CIBAFI will be continuously assessing its deliverables against global developments to continue fulfilling its mandate and supporting the development of the industry.

SG: What are the biggest challenges for the Islamic finance and banking industry?

CBAFI: The financial sector and the global economy are witnessing rapid developments and changes that bring significant changes to the Islamic financial services industry. The rising interest in sustainability and climate change matters, the acceleration in digitalization, and the increased competitiveness in the market due to new market players' entrance are all associated with new challenges and concerns. Consumer attraction, relation, and retention are some of the challenges pushing banks today to adopt innovative business models and think beyond their traditional field to sustain their market presence. In addition, technology integration is also raising new challenges related to cybersecurity risks and others. The macroeconomic environment concerns resulting from global and regional events also impact the growth of the industry and create challenges for banks.

Challenges will always be present due to the inherent conditions and the changes in the global environment. Overcoming these challenges requires collaboration on an international level with all market players and identifying best practices that will help Islamic financial institutions navigate the rapid industry developments, which we aim to achieve through the revised CIBAFI Strategic Plan.

Dr. Abdelilah Belatik, Secretary General of CIBAFI (Courtesy: CIBAFI)

SG: What are the key growth geographies and segments of the industry? How will CIBAFI help those efforts?

CIBAFI: The interest in Islamic finance has grown in different regions, and several initiatives are being adopted to integrate Islamic finance into the financial ecosystem. In existing markets, we believe countries like Indonesia and Turkey have not yet achieved their true potential. And we will see significant at scale development in the coming years.

On the frontier markets front, Africa is one of the emerging regions where many countries are putting in place the necessary elements to adopt Islamic finance. Some countries are more developed than others in terms of regulation and completeness of the ecosystem. However, efforts are being deployed and more countries are convinced of the importance of this industry as a salient component of the international financial system. The Commonwealth of Independent States (CIS) region is another prominent region where Islamic finance is expanding and growing.

The use of technology through creating digital banks can help the industry in penetrating new markets. The alignment between the principles of Islamic finance and sustainability is another factor that will facilitate the adoption of Islamic finance in non-traditional markets.

The banking sector is the most developed segment of the industry; however, with the expansion in new regions and the opportunities offered by technology and sustainability, other segments such as the Takaful, the capital market and Islamic crowdfunding will experience growth and development. Recognizing this potential growth, CIBAFI is diversifying its initiatives to cover and accompany all types of institutions and new markets to support their efforts in adopting Islamic finance. For instance, we are planning to expand our awareness and professional development offerings to include Russian and Turkish languages, in addition to the existing Arabic, English and French programmes.

SG: Besides the strategic plan launch, what are the latest CIBAFI developments?

CIBAFI: CIBAFI Strategic Plan is the result of continuous assessment of the global developments and the identification of the necessary adjustments that will assist the Islamic financial institutions in their journey. CIBAFI focused its initiatives in promoting sustainability and technology adoption as key growth drivers for the industry. This led to the launch of several initiatives such as the establishment of the CIBAFI Sustainability Working Group (SWG) to work on various projects that will help the industry in the sustainability integration. One project under this group is the launch of a Sustainability Guide to help Islamic financial institutions integrate sustainability in their operations and business activities, considering environmental, social, and economic objectives. Other projects are in the pipeline, including the development of a carbon footprint measurement methodology that will assist Islamic financial institutions in measuring and monitoring the carbon footprint of their investment portfolio, and a Guide for Products Development to assist Islamic financial institutions, from different jurisdictions, in developing Islamic financial products that are in accordance with Shariah guidelines and sustainability.

With regards to technology, CIBAFI established and kick-started the work of the Innovation and Technology Working Group (ITWG) to provide the industry with an experience-sharing platform and promote innovation and technology adoption in the Islamic financial services industry. Several publications are also being released to assess certain segments of the industry. Most recently CIBAFI launched its Global Islamic Funds Report and in the coming period, CIBAFI will be launching publications to cover various emerging issues in the industry.

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