Indonesia: Islamic banking faces skills shortage    
Industry News
The AsianBanker

The new window of opportunity for conventional banks to offer Islamic banking services may pose more of a challenge to local banks before they can truly reap the benefits of such an opening.

In a bid to promote growth of Islamic banking in Indonesia, Bank Indonesia, since January 2006, has allowed conventional branches with syariah banking units to offer syariah’s products and services – office channeling. This frees banks from having to set up syariah banking branches. However, issues such as integration with conventional banking and lack of Islamic banking-specific human resource need to be addressed.
Eko B. Suharno, head of syariah banking division, Bank Rakyat Indonesia (BRI), underscores his mission to restructure the conventional branches through office channeling ”without confusing the customer by providing both conventional and syariah services in one branch. We would like our customers to think of it as simply offering new products and services.” He is optimistic that this would enable customers to familiarize with the syariah banking concept.

Despite the Islamic banking industry booking growth in assets of more than $2 billion in 2005, which counts as a 25 – 30 percent growth, the development of the syariah’s concept through market familiarization is relatively slow due to lack of human resources.

In addition to the basic financial knowledge, an Islamic banking employee must be well-versed in syariah rules – ihsan and itqan and be able to apply these rules to banking from the Islamic point of view. Ironically, as the largest Muslim country in the world, Indonesian Islamic banks seems to have a difficulty in recruiting people who posses both qualifications.

This shortage is evident from the survey finding by Bank Indonesia that 80 percent of the employees in Islamic banks come from conventional banks. These recruits are typically introduced to Islamic banking concept via short training and workshops. With the rising demand, these employees are required to apply the knowledge in the operations instantly.

With the syariah corner now opened to conventional branches via office channeling, the tendency and urgency of recruiting Islamic banking employees from conventional banks would be even greater than ever. With experience only in conventional banking and insufficient training and knowledge in Islamic banking, issues of these employees dong business via the proper syariah concept may surface.

Integration issues may further complicate human resource management. Suharno expresses his concerns, “What I am afraid of is that the current conventional employees would see the new people (syariah employees) as competitors in the business. This is a psychological issue that might become a threat for the internal matter.” He explains that the management must convince employees that the two different departments within the bank are not competitors.

Suharno recognizes that the new window in developing Islamic banking via conventional branches is going to be challenging, yet beneficial for the industry, “It is going to be a challenge for us, (but) it would definitely bring some good turn for syariah banks’ expansion.”– A.T. Gandasaputra
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