Riyadh, Asharq Al-Awsat- Last week, I attended an introductory meeting for Alinma Bank, a Saudi bank that is in the process of being established and the capital of which is estimated at 15 billion Saudi Riyals. The chief executive of the bank Abdul Mohsen Al Faris delivered a speech during the meeting in which he focused on the bank’s adherence to the provisions of Islamic law regarding all its transactions so that the goals of Shariah may be realized and so that the bank can distance itself from any kind of Islamic banking that is surrounded by uncertainty. Such uncertainty has become widespread within the industry recently and this was further highlighted by the director of Alinma bank’s Shariah committee Sheikh Abdul Rahman Al Atram.
The truth is that this meeting raised the level of aspiration that I have for Islamic banking as it can go back to achieving its objectives and aims for which it was established in the first place so that through it, the world can see what Islam has to offer in terms of solutions to difficult financial problems. This comes after Islamic banking was seized, in recent years, by those who only view it as a tool to double their profits.
Would those in charge of the bank be able to fulfil their promises and the hopes that are attached to them? The answer, without doubt, is yes.
Nothing can stand before will, which is armed with potential and knowledge as well as patience and trust in God. The Quran says, “I desire nothing but reform so far as I am able, and with none but Allah is the direction of my affair to a right issue; on Him do I rely and to Him do I turn,” (Surat Hud, Verse 88). Good intentions alone do not produce results therefore those in charge of the bank must translate words into action by drafting plans that are based on reality and its variables, in addition to providing the necessary means to success, the most important of which I consider to be the following:
1 – The bringing together of leadership and human cadres that are competent and successful within the circles of Islamic banking even if they have no experience in Islamic banking where competent human cadres bring about success with God’s blessing. Although this polarization is costly whereby there is a lack in human competencies and competition between institutions is intense, the bank, with its material capabilities, would be able to have the best experiences in this field.
2 – The use of the replacement method in dealing with Islamic banking services that are doubted so that there is no use for them after a permissible alternative has been created. This is a wise step where the bank, which is a profitable financial body working in a competitive environment, must take into consideration the interests of the investors so that the experience would not fail.
3 – Establishing a unit for research and development directly related to the chief executive and that consists of an expert team or a so-called ‘think tank’. The task of this team is to create solutions to problems and innovate and develop tools.
4 – Opening channels of communication between the bank and external creators in order to benefit from their thinking and innovations by organizing workshops, discussing problems, offering incentives and maintaining their material and literary rights related to the services and innovations that they offer to the bank.
5 – Investing in technology by establishing strategic partnerships with other pioneering companies in this field to employ technology to serve Islamic banking as I mentioned in a previous article entitled ‘Modern Technology and Islamic Banking.’
6 – Striving towards creating a market to exchange basic commodities within the kingdom of Saudi Arabia through the establishment of companies founded for this purpose in cooperation with the suppliers of basic commodities such as SABIC (Saudi Basic Industries Corporation) ARAMCO, cement and steel companies and silos so that these companies could form the core of a stock market for exchanging commodities.
7 – Seeking to develop tools for assessing the risks entailed in the financial tools that are based on profit and loss sharing. Perhaps the inability to measure risks of these tools that are based on profit and loss sharing is what led Islamic banking to resort to tools such as Murabaha and Muwaraka.
* Lahem al Nasser is an Islamic banking adviser.