Manzil launches “the Halal version of Wealthsimple” for Muslim Canadians

Manzil aims to help Muslims balance financial needs and religious requirements.

Manzil has launched a new investment platform to help Muslim Canadians build wealth in a way that is consistent with their ethical and spiritual obligations.

The Toronto-based FinTech startup caters to a sizeable, fast-growing but underbanked demographic that has largely been shut out of the traditional financial system by a lack of options that satisfy their religious requirements. As Manzil co-founder and CEO Mohamad Sawwaf put it, many Muslim Canadians avoid investing their money altogether because they don’t have “the peace of mind” that the available options are Halal.

“We want to move them from exclusion into inclusion.”
-Mohamad Sawwaf, Manzil co-founder and CEO

“We’re talking about a completely missed opportunity with cash being undeployed in the market,” Sawwaf told BetaKit in an exclusive interview.

With its new, Halal-certified offering Manzil aims to change that. Sawwaf described Manzil Invest, which the startup claims is “Canada’s first actively managed Halal digital investment platform,” as “the Halal version of Wealthsimple.”

Building a digital Islamic financial institution in Canada hasn’t been easy. As Sawwaf explained to BetaKit earlier this year, Manzil has been forced to shoulder most of the burden of building financial access for Muslim Canadians alone. Manzil’s 2020 launch followed two and a half years in “R&D mode.”

Launching a digital investment platform has always been a part of Manzil’s long-term roadmap, and the startup was able to turn those plans into a reality through a partnership with wealth management services startup OneVest.

Founded in 2017, Manzil builds and distributes Halal-certified home financing and investment products, including Halal fixed-rate and variable-rate mortgages, using capital sourced from the Halal Manzil Mortgage Fund, which trades on the Neo Exchange and acts like a fixed-income fund. Manzil’s mandate is to bring a digital Islamic financial institution to Canada and the country’s more than one million-member Muslim population.

Manzil, which has raised just over $3.5 million CAD in venture funding, is compliant with Accounting and Auditing Organization for Islamic Financial Institutions standards. To ensure its offerings are consistent with Islamic religious principles, Manzil’s products have been reviewed by a Shariah supervisory board, internal and external Shariah auditors, and a third-party Shariah advisory firm.

Through Manzil Invest, Manzil seeks out “socially responsible investments” with “no ties to the tobacco, alcohol, firearms, and adult entertainment industries.”

According to Manzil, most professionally managed Halal portfolio options through bank brokerages or specialty portfolio management shops carry significant investment minimums, between $100,000 and $500,000. Sawwaf said these requirements pose a significant barrier for Muslim Canadians given many have avoided participating in the stock market to date.

Some of the barriers Manzil itself has faced in building these products include a bevy of regulatory, compliance, and cultural roadblocks that don’t exist in other markets that already provide similar services, such as the United Kingdom.

RELATED: Manzil looks to expand Halal financial services platform with $2.44 million CAD, acquisition of Muslim Will

“We’re doubly regulated,” Sawwaf told BetaKit earlier this year, pointing to the unique mix of traditional regulatory and Shariah compliance requirements Manzil must meet.

Sawwaf said that he has spoken to many Canadian banks, but claimed that none believe it is worth their time to spend tens or hundreds of millions of dollars to provide Islamic banking services. While fellow Toronto-based FinTech Wealthsimple has begun to move into this space with its Shariah-compliant ETF and Halal investment portfolio, the firm does not offer any other Halal products, let alone mortgages (an area Wealthsimple has yet to expand to more broadly).

Amid these roadblocks, Sawwaf noted that partnering with OneVest has made it easier for Manzil to launch its long-planned, Wealthsimple-esque investment platform. “Having a white label robo-solution in Canada was something that I’ve always wanted to make life easier for us,” he said. “We really really love the platform and the ability for us to customize it for our particular mandate.”

Partnering with Calgary and Toronto-based OneVest eases Manzil’s regulatory burden given that the former is a registered portfolio manager in each province and territory of Canada and an investment fund manager in Alberta, Newfoundland and Labrador, Ontario, and Québec. OneVest also recently helped Neo Financial launch its own investment product.

RELATED: FinTech Nuula launches app in Canada in partnership with Caary and OneVest

Manzil Invest gives users access to custom investment portfolios managed by professional money managers, automated investing, and the ability to start investing with as little as $1. “We want to move them from exclusion into inclusion,” said Sawwaf. The platform is available starting today in all of Canadian provinces but Québec (where Manzil hopes to launch soon) through the company’s website.

All assets on Manzil Invest are held at CI Investment Services, an Investment Industry Regulatory Organization of Canada-registered investment dealer, and investment accounts carry Canadian Investor Protection Fund protection, within specific limits, up to $1 million.

According to Sawwaf, the launch of Manzil Invest marks another step on the startup’s journey towards taking care of its Muslim Canadian clients’ financial needs “from cradle to grave.”

“From a broader perspective, this is just one piece of the puzzle of being able to be that full-fledged Islamic financial institution that we want to put together,” said Sawwaf.

Manzil began with the Halal home financing side of its business, which Sawwaf described as the startup’s “anchor product.” But as Sawwaf pointed out, mortgages are big ticket items that require large down payments. Given today’s uncertain economic environment and the present lack of access to Halal financial services for Muslim Canadians, the CEO noted that “the majority of the community” may not have the ability to make those down payments yet—hence the need for an investment platform to help them get there.

With Manzil Invest, Manzil aims to help Muslim Canadians put their cash into “appropriate investment vehicles” that take advantage of tax incentives and allow them to save for their goals.

Feature image courtesy Manzil.

Josh Scott

Josh Scott

Josh Scott is a BetaKit reporter focused on telling and breaking Canadian tech and innovation stories. His coverage is more complete than his moustache.

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