Value Based Intermediation and Interconnection of Sustainable Development Goals in Islamic Banking Framework

Abstract

The introduction of a strategic paper on Value-Based Intermediation (VBI) by Bank Negara Malaysia (BNM) on 20th July 2017 is expected to change the landscape of Islamic banking and finance. It involves the strategic change of the industry players as well their supply chain including the mindset of existing workforce and its shareholders’ expectation to ensure the success of the initiative. As the default state of the current industry stakeholders are based on profit maximization paradigm, achieving the initiative objectives are doubtful. Employing basic qualitative research method, the objective of this conceptual study is to highlight the issues and challenges faced by the industry players in realising the initiative of VBI. The research will also discuss from the aspects of Sustainable Development Goals (SDG) and propose suggestions as the contribution of the paper. The authors note various issues and challenges for the industry but with appropriate strategies can open up opportunities for the players. For the initiative to be successfully implemented, the bank’s key staff needs to change their profit maximization and compliance mindset including its’ shareholders. The culture of the bank requires recalibrating to suit the value driven paradigm.