A Scorecard to Measure Good Behaviour


Good Values for Better Banking

On the sidelines of the Global Islamic Finance Forum 2018, Global Alliance for Banking on Values head of Scorecard Development & Senior Adviser to the Executive Director, David Korslund shares key measurement features to keep firms on good behaviour while still maintaining strong margins.

Value-based banking is not just a buzzword that is bandied around by bankers. It is a deep-seated measurement system that aims to change the overall thinking of how organisations, particularly banks want to improve on this front.

“Value based banking, or in sometimes referred to Value-Based Intermediary (VBI) is a strong way for banks to change their corporate culture,” says David Korslund of The Global Alliance for Banking on Values (GABV).

“Financial returns is indeed important for corporates and their investors but value based banks tend to achieve more since they are not only concerned with mere profits, but real change in their communities,” he continues.

“It is therefore imperative that value based banking be done by countries who truly want change in how banks are run. In Malaysia, it seems natural that the Islamic finance sector embrace this wholeheartedly since the values of both Islamic finance and value-based banking overlap quite nicely,” he finishes.

The fact that value-based banking or VBI is being inculcated in Islamic finance indeed falls nicely in place. 

In the same event, former Bank Negara Governor Tan Sri Zeti Akhtar Aziz also commented on the rise of Islamic banks and the industry at large, when receiving the coveted Royal Award in Islamic Finance.

“Developments in Islamic Finance in this decade has gained a progressive momentum world wide,” Zeti says. “Its outreach and influence now extends beyond the traditional Islamic markets. In 12 jurisdictions, Islamic banking assets make up of more than 15 percent of the total banking assets.

"In 2017, global Islamic banking assets reached USD1.5 trillion while global sukuk outstanding had surged to USD400 billion for that same period,” she continues.

Making this statement, Zeti also proves that the performance on this metrics makes Islamic finance one that is being seen with envy by other markets.

“This impressive performance essentially demonstrates the ability of Islamic finance to deliver financial offerings that meets the demands of a rapidly changing modern economy and its ability to remain competitive,” she says.

“Equally important are a number of enabling factors that not only include the elements that are intrinsic to Islamic finance but also the strong foundations that have been built over the years,” she adds.

But can continued growth in Islamic finance sustain itself? After all, the fact that the growth rates have dipped in the sector proves that the industry is maturing and therefore new adjustments must be made to accommodate this change. Governor Zeti however thinks that there is still resilience in this regard.

“Cumulatively this has ensured this growth and resilience,” she says.