Adnan Zaylani Mohamad Zahid: Leadership, values, ethics and Islamic finance - the next generation of Islamic financial institutions Keynote address by Mr Adnan Zaylani Mohamad Zahid, Assistant Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the IFN Asia Forum 2019, Kuala Lumpur, 23 April 2019. * * * Allow me to first begin by thanking the organiser for inviting me to deliver the keynote address at this annual IFN Asia Forum. It is a pleasure to be here this morning in the company of such a diverse gathering of Islamic finance professionals and weigh in on an important subject of which the organiser had kindly assigned me; “Leadership, Values, Ethics and Islamic Finance: The Next Generation of Islamic Financial Institutions". For many of us, the 2008 global financial crisis will be one of the major events that stays with us throughout our careers. In Asia, we had the Asian Financial Crisis in 1998 which was momentous but given the scale and its far reaching impact, the 2008 crisis has left far larger imprints. More than a decade has passed, yet we continue to live under its shadows. A world that has grown at a slower pace, in a low inflation, bordering on deflationary risk environment for the better part of a decade. Banking and financial regulations that undoubtedly have strengthened the resilience of the system, but could have had unintended consequences on growth.
The banks’ progress and effectiveness of VBI-related initiatives would be captured through the VBI Scorecard. The underpinning thrusts of VBI are also gaining relevance in the takaful industry as takaful operators are taking initial steps in exploring value-based protection for their customers. Given the universal nature of VBI, I believe that its adoption by financial groups which comprise the conventional financial institutions, as well as issuers and investors would be a natural evolution in the financial ecosystem. Expectations on the next generation of Islamic financial institutions The next generation of Islamic financial institutions would thus be driven by values and not just profit. With a moral outlook for the ultimate good, strengthened by self-discipline, greater accountability and integrity, Islamic financial institutions will have stronger consideration of the impact of decisions made. There should be greater drive to continuously improve their offerings and treatments towards customers and employees, which include fair and transparent disclosure in order to increase the positive impact of their activities. Development of banking practices based on VBI concepts are also anticipated to encourage the creation of new business opportunities and provide the foundation for better returns for Islamic banks over the long term. An example is assessment of financing application by Islamic banks based on value-creation instead of mere credit scoring which would benefit business propositions from new sectors such as SMEs. Another example is refocusing, strengthening and repositioning of personal financing 3/4  BIS central bankers' speeches  by Islamic banks to best meet the needs and circumstances of customers.