Omar Shaikh: Islamic banking could be perfect fit for Scotland
YOU cannot mask what has happened to the banking industry over recent years. Alongside the near collapse of our biggest banks, there has been a disintegration of trust.
It has spurred many of us from the worlds of business, the churches and academia to explore new models of financial institution that bring together Islamic and ethical banking for a more socially-focused view of lending.
Today the Tods Murray/Islamic Finance Council UK (IFC) ethical finance forum will look at the practical challenges relating to marketing and distribution and discuss methods for measuring social returns.
Over recent weeks, these discussions have become even more pertinent against the backdrop of constitutional reform. Scotland’s monetary system is being hotly debated.
We strongly believe the shared values between Islamic finance, the churches and broader ethical banking could provide the bedrock to a more stable and prudent banking sector whatever the outcome of a referendum, and no less so were Scotland to become independent.
We would not want to be in a similar situation to Ireland trying to bail out our banks. IMF studies have shown Islamic banks are more stable than their conventional counterparts and we need to see what we can learn from this to mitigate systemic risk.
Scotland has a tremendous heritage for ethical and prudent finance from the original mutual investment trusts to the Savings Bank movement. Indeed the Savings Bank structure inspired the first attempt at a modern Islamic bank in Egypt more than 40 years ago.
This is also a nation for innovation. In a brave, new world, the Scottish banking system has the opportunity to once again show moral leadership giving the people of Scotland a fair, socially responsible bank system that works for them and ensures Scotland can withstand any future financial crisis.
Many people are already basing their financial decisions on moral considerations, there is a growing appetite for ethical trading and there is an expanding sector of society who will choose social over purely financial returns. That is worth building on.