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We have often made a point to emphasize what is often unsaid and otherwise unreported across the industry. This might be due to the media lacking an understanding of financial concepts or a tendency to underestimate mundane topics. Examples such as takaful, portfolio management in general and profit-sharing as a whole - these are all seemingly obfuscated by the structural maze of their sukuk cousin and its paradise for financial-engineers. Another victim of this industry noise has been the generational change that is gradually emerging across the industry. It is not a hot topic and we don't expect to see a sponsored industry report anytime soon, but it is an important trend nonetheless.

This generational change has the potential to make an impact, and this can be substantial. Take for instance the evolution of the SRI industry: a decade ago this was arguably the gulag of finance, a nice department for you to retire, a boring and unexciting corner of the financial village (for the uber cynical a convenient place to send the colleagues you didn't like). SRI today is absolutely different: it is a magnet for talent where the top graduates want to go - as they want to engage the issues, be part of the solution, get involved with new and exciting strategies. This switch is purely driven by a generational turnover, where the youth that grew up with solar panel demos and saving the whales videos has finally had enough with the promises and wants actions.

Islamic finance is primed for a similar rejuvenation - the human capital that is brewing across campuses and schools is building a fresh and dynamic pool of talent for years to come. These young practitioners arrive with an inquisitive nature, and they are finding that the current Islamic financial system is not always reflective of its founding principles. This is bound to increase the debate of where the industry is heading and is epitomized by a collective sense of frustration: On one hand the opportunity to showcase the ethical principles of Islam seems to have been diluted into an exercise of financial formulae; On the other hand some of the industry output has become a source of ridicule - seemingly backfiring on the industry.

Further concerns are being raised when one considers that Islamic finance has gradually converged on the concept of sustainability (it is no coincidence that one of the upcoming AAOIFI standards is on Corporate Social Responsibility). In fact, we have heard several calls for the industry to adopt initiatives such as the United Nations Environment Program Finance Initiative (from Islamicfinance.de - see reference link) and the United Nations Principles for Responsible Investing (see reference link). However, scarce attention has been given to what sustainability actually means - one of the earliest and broadest definitions comes from the UN itself: "sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs" (refer to the report of the Brundtland Commission - see reference link). This is an intrinsic and undeniable linkage between the current/present and the next/future generations.

A baptist preacher once noted that his generation had once gathered to cash a cheque on its government, a cheque that had been returned marked 'insufficient funds' as he argued that the issuer had defaulted on its community - specifically on its moral commitment to a certain group of its citizens. It seems we have come full circle when we consider that sakk (the singular of sukuk) can be traced back as a root word for cheque, and that such a financial instrument has come to represent the default of the industry on its younger constituents.

This promissory note, issued by an earlier generation of Islamic finance founders and pioneers, has been handed over to a new generation of young, energetic, and idealistic Muslim professionals. They have come from all corners of the world, we have encountered them in Casablanca, Toronto, Bankstown, Jakarta and Johor Bahru. They carry within them a very strong will to support this industry, and are certainly willing to see it flourish. Nevertheless, we hear from them a similarly-strong dissatisfaction that this same industry is failing to recognize their readiness and willingness to engage. This is not a clear cut issue and don't expect unanimous agreement, but we have heard their trials and tribulations and we know there is much discontent, one of the advantages of being non-aligned and independent is the ability to hear privately what might otherwise not be discussed publicly.

Many of them try to deposit this cheque (by engaging this industry as consumers, practitioners or just mere observers) only to find that the issuer seems to be bankrupt (in so far as its principles and priorities). Their response varies tremendously: denial (head in the sand acceptance), despair (how to engage? how to contribute? where to begin?), dismay (after encountering an often unpleasant reality), even distaste for the real industry they uncover. But many forge ahead, even if it is from the sidelines, they want to build on the positives: driving purpose (emphasize the original objectives of the industry), damage control (cleaning up what has been built thus far), deterrence (push aside the nonsense and protect consumers), and most importantly development (the improvement and betterment of the industry as a whole).

Islamic finance might be based on divine scripture, but this does not make it a perfect industry (after all it has been designed and built by mortals). Nevertheless, this industry has certainly been blessed - but not from the top echelons of power but rather from the very bottom (not by idealistic and visionary leaders but by hard-working and dedicated individuals). It might not be perfect in the first place, but this is the challenge - to engage this imperfect industry and collectively work towards a better version of itself.

The check might have bounced but it is clear that this generation is willing to extend a facility to the industry for it to reorganize its priorities and avoid a moral liquidation. This generation is writing a new cheque for the future, one that is default-free (to the chagrin of the profit-sharing purists). So much to look forward to.

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