Manzil has brought its services to the United States (US) with the launch of a new investment platform tailored to the financial goals and religious requirements of Muslim Americans.
The Toronto-based Islamic FinTech startup purchased US peer Aghaz Investments last year to fuel this expansion, acquiring the latter’s team, tech, and licence with the US Securities and Exchange Commission (SEC) as a Registered Investment Advisor.
Over the past eight months, Manzil has turned those assets into a refined, rebranded, mobile investment app, Manzil Invest USA, that is compliant with sharia (Islamic law). It’s now available to US customers on iOS and Android.
“We want to be the North American player in this space.”
Mohamad Sawwaf, Manzil
In an exclusive interview with BetaKit, Manzil co-founder and group CEO Mohamad Sawwaf said that Manzil is ready to move into the US after establishing a presence and a strong brand in Canada. South of the border, the company has seen lots of demand and has big plans.
“We want to be the North American player in this space,” Sawwaf said. “That’s really our moat, is to be the North American Islamic neobank and focus on this demographic group that’s not only the fastest-growing, but also the second-largest religious base across the board.”
Founded in 2017, Manzil aims to help Muslim Canadians and Americans build wealth in a way that is halal, or consistent with their ethical and spiritual obligations, catering to a growing but underbanked demographic largely shut out of the traditional financial system by a lack of options that satisfy their religious requirements.
Among other things, Muslims observe a prohibition on investing in any companies or products tied to alcohol, tobacco, gambling, or weapons. They also do not use financial services that involve receiving or paying interest.
Manzil has sought to build “the halal version of Wealthsimple,” spanning home financing and investment products. These include halal mortgages using capital sourced from the Halal Manzil Mortgage Fund, which trades on the Cboe Canada exchange (formerly Neo Exchange) and acts like a fixed-income fund. It also offers wills (through its acquisition of Muslim Will) and savings solutions in Canada.
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Manzil Invest USA currently offers customers access to a curated list of halal stocks and exchange-traded funds screened in accordance with Islamic and ethical investing principles using Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) standards and the Quaker-created American Friends Screening Criteria. It helps clients automatically invest in different products based on their risk tolerance and performance targets, and provides educational tools to aid decision-making and financial planning.
Manzil is providing these services in the US through a strategic partnership with Alpaca, a Financial Industry Regulatory Authority-registered broker-dealer. Manzil Invest USA wants to make it possible for clients to open accounts with minimal friction and permit them to begin investing in as little as five to 10 minutes, Sawwaf said.
Chief investment officer and head of Manzil USA, Khurram Agha, who previously founded and led Aghaz as CEO, told BetaKit that Muslim Americans have “a lot of purchasing power.” But Agha and Sawwaf argued that while the US has a large Muslim population and a growing list of sharia-compliant funds, the country has few FinTech investment platforms that meet their needs.
“We feel that there’s still an advantage for Manzil Invest, because it’s still an untapped market,” Sawwaf said.
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Agha noted that many Muslim Americans have historically thought that the only way to save money is to park it in real estate. “Having access to more liquid investment types, taking away the complexity of it, that’s what this demographic needs, and that’s the market that we’re really targeting,” he said.
Sawwaf called expanding into the US “a no-brainer,” given the size of the market and the low barriers to entry. He said Manzil was also attracted to US stakeholders’ willingness to work with the startup, from regulators to partners.
“Having the ability to be able to launch a program like this in less than a year is not necessarily unprecedented, but would not be able to be done equivalently in Canada,” Sawwaf argued, claiming that it would take years for Manzil to become licensed across the country and build its own tech in the way that it has in the US.
CEO Mohamad Sawwaf expects Manzil to follow “a similar playbook” to Canada in the US but “in reverse.”
Sawwaf said Manzil’s setup in the US gives it “more flexibility and control” than its Canadian operations. In the US, Manzil owns its tech stack and a licence to operate in all 50 states, but in Canada partners with Toronto-based business-to-business wealth management platform OneVest to oversee its work and contends with a more cumbersome regulatory environment.
In Canada, Manzil has initially taken a web-based approach, and plans to launch a mobile app soon. In its home country, Manzil’s core user demographic is skewed towards younger, more tech-savvy users between the ages of 18 and 45 years old, and Sawwaf expects the company to see similar uptake among this group in the US.
Agha called Manzil’s initial US launch “a springboard,” noting that the startup plans to expand its investment offerings—including with retirement accounts “very soon”—and move into other areas of wealth management for Muslim Americans over time.
This contrasts with the startup’s approach in Canada, where it started with halal mortgages before expanding to investing, wealth management, and wills.
Sawwaf expects Manzil to follow “a similar playbook” in the US but “in reverse,” leveraging the assets under management (AUM) it attracts through its investment platform to move into wills and mortgages, while eventually planning to launch “a core banking strategy” with chequing and savings accounts.
As Manzil executes on its American plans, the company has been growing in Canada. Earlier this year, Manzil brought its mortgage offering to Québec (joining British Columbia, Alberta, and Ontario) and crossed $100 million CAD in AUM. Sawwaf claimed that the startup remains well-capitalized and expects it to reach break-even profitability by the end of 2025.
Feature image courtesy Elevate. Photo by Morgan Hotston.