KUALA LUMPUR (Sept 25): With the introduction of value-based intermediation (VBI) by Bank Negara Malaysia (BNM) in 2017, the Association of Islamic Banking and Financial Institutions Malaysia (AIBIM) is confident the central bank's target for the local Islamic banking industry to have 40% market share in total banking assets by 2020 is achievable.

As a grouping of Islamic banking and financial institutions in the country, AIBIM has taken a lot of initiatives to differentiate themselves from their conventional counterparts to achieve the target, said AIBIM president and RHB Islamic Bank Bhd chief executive officer Datuk Adissadikin Ali.

VBI, according to BNM, is an intermediation function that aims to deliver the intended outcomes of syariah through practices, conduct and offerings that generate positive and sustainable impact to the economy, community and environment — in other words, going beyond mere compliance towards delivering value propositions.

"The principles of VBI are key to strengthening the roles of Islamic banking institutions and position Islamic finance as a prominent and leading agent of change by incorporating holistic business practices and offerings into the financial system to ensure a positive and sustainable impact on the economy, community and environment," he said during his speech today at a press briefing for the Global Islamic Finance Forum 2018 (GIFF2018).

GIFF2018 organising chairman and CIMB Group Islamic Banking chief executive officer Rafe Haneef said the focus during the initial stages of Islamic finance in Malaysia was on making conventional financial products "halal", to comply with Islamic principles.

"The market share of Islamic banking assets in Malaysia leapt to a high of 28% in 2016 from 7.1% in 2010 but this has since plateaued, signalling the need to explore opportunities to boost growth and reinvent its strategies to enhance our market share," he said.

As the industry progresses, Rafe said the market is working towards incorporating values beyond just "halalness", to ensure that halal financing is not creating any negative impact to the environment and other social considerations.

"When we look at VBI as an agent of change, we wanted to make sure that we provide the platform for banks in general to adopt a more sustainable finance framework. In order for VBI to materialise, we need a framework.

"So within the Islamic finance industry, we are working to come up with a framework where we want to move beyond credit checks to also look at the impact of the financing on sustainability," he said.

Organised by AIBIM, GIFF2018 will be held on Oct 3 and 4 with the aim to deepen the conversations and discussions on embedding sustainable policies in Islamic banking and finance.

With the theme "Value-Based Intermediation: Beyond Profit", GIFF2018 will bring together Islamic finance leaders, policy decision makers and sustainability experts across the globe to discuss latest developments, challenges and prospects of sustainable banking in the global Islamic finance industry.

The Governor of BNM Datuk Nor Shamsiah Mohd Yunus will deliver the keynote address at the forum.

Other notable speakers at the event include Dubai Islamic Bank group chief executive officer Dr Adnan Chilwan, member of The International Shari'ah Research Academy for Islamic Finance (ISRA) Council of Scholars Dr Sheikh Nizam Yaquby, Arabesque Asset Management Ltd chief executive officer Omar Selim, board member of HSBC Amanah Dr Ashraf Iqbal and president and chief executive officer of The International Centre for Education in Islamic Finance (INCEIF) Prof Datuk Dr Azmi Omar.