1) The Islamic finance industry is now mature enough that it no longer needs to emphasize the "Islamic" label in its branding, and could benefit from an independent organization assigning sharia quality ratings to increase transparency. 2) One challenge is that the "Islamic" terminology sometimes confuses consumers, especially in non-Muslim majority markets where more must be done to demonstrate that Islamic banks do not pose greater risks than conventional banks. 3) The CEO believes for-profit sharia advisory firms represent a weakness in governance and that sharia costs should not be passed on to customers; emphasizing the tangible benefits like linking transactions to real assets could help the industry grow without relying on religious terminology.

1. Session 3: Is it time to stop calling it Islamic Finance?
The Islamic finance industry is mature enough to shift away from the „Islamic‟ branding but
the authenticity could be better monitored with or without the label if there were an
independent organization in charge of assigning sharia quality ratings. This was the
message from Moinuddin Malim, CEO of Mashreq Al Islami at the Thomson Reuters Islamic
Finance Gateway Focus Session held earlier this week on Oct 23.
Malim‟ s idea is based on the increasing maturity of the Islamic finance industry that
continues to see growth at twice the rate of the conventional finance industry even in more
mature markets such as the Gulf Cooperation Council (GCC) countries. In other markets,
consumers sometimes get confused about the terminology.
This is particularly concerning in non-Muslim majority markets where regulators have to be
sold on the fact that Islamic banks face the same risks as conventional markets, but provide
an opportunity to improve financial markets. However, these markets currently rely upon a
leader committed to Islamic finance or a large enough Muslim population demanding Islamic
finance. In markets where these are absent, the confusion about the Islamic label becomes
an additional hurdle to win regulatory changes that will allow Islamic banks to operate on a
level playing field.
The different terminology was adopted earlier in its history, but the industry should not rely
on it as a key selling point. If there were a way to demonstrate quality of the internal sharia
governance like a rating from an independent organization, it would be unnecessary
because the substance of how Islamic banking operates would provide the benefit to
consumers and the “Islamic‟ label would not add further value.
Malim: against for-profit sharia advisory firms
One area that Malim views as a weakness in the current sharia governance system is the
development of for-profit sharia advisory firms that operate like law firms. Malim believes that
the sharia advisory side of the business should not be done for profit, and regardless of how
it is coordinated, the cost should be borne by the bank and not passed along to customers in
the form of higher costs.
The value Islamic banks present to customers is that they change the structure of products
to incorporate an asset, and connect transactions to underlying business, as well as limit
financing to some industries. This is one area where Islamic banks overlap with ethical
finance, an area growing since the global financial crisis. Encouraging growth in this area will
be positive for Islamic finance and if they have a way to demonstrate the quality of their
sharia governance, the industry can take a step forward by dropping the use of “Islamic‟
and focus on what the firms offer, not the source of its guiding principles.