The Islamic financial services industry continues to experience profound regulatory and practice challenges, and there is continued pressure on industry stakeholders to revisit their governance and business models, a report said.

In recent years, there has been much discussion of Islamic Finance moving into mainstream global finance, added the report titled “The catalysts for change - Strategic priorities in governance and regulation in Islamic Finance practice” from Deloitte, a professionals services firm.

While it has not yet made the desired impact on a global level, Islamic Finance’s integration to mainstream global finance is largely complete and likely irreversible. Despite continuing to grow, some uncertainty over regulatory acceptability in some jurisdictions still remains unsolved.

Returns on Islamic funds and investment products often outpace their conventional counterparts. The Sukuk market is growing in several parts of the world and has attracted sovereign and institutional investors worldwide.

Takaful insurance is growing by two-digit figures and the potential for further growth is evident in several markets in Asia, Africa and the Middle East.

However, Islamic Finance still faces the aforementioned challenges and perhaps a few new emerging ones, but the industry generally continues to grow and the overall outlook for growth is strong due to both long-standing and new trends globally.

Looking forward

“Reactions to some of the issues emerging from the current long economic, social and financial uncertainties around the world have all contributed to the big question of change in the perception and practice of our industry practitioners,” Deloitte said.

“For the purpose of our paper and analysis we have defined change as a strategy implemented by the board, executive management, and other personnel of the IIFS, designed to provide an overhaul plan to implement leading industry practices.”

“One new approach that we are advocating is to think about engaging the industry in collaborative dialogue platforms to address the catalysts for change in regulation, governance, risk and reporting transparency,” the report said.

“This approach is driven partly by current industry needs to stand up to competition and challenges, and partly by the increasingly strategic role that change is expected to play in business today. For many IIFSs, we believe a change may be the right plan for the industry’s boards and executive management to revitalize and energize policies and plans, and boldly develop the services and capabilities needed to support IIFSs’ future growth objectives.” – TradeArabia News Service