A Canadian Islamic fintech start-up is looking to expand beyond Toronto and into the US as it builds its product pipeline, anchored by a Murabahah mortgage product, following a successful seed round.
Manzil is targeting to launch a Murabahah-based mortgage product of up to 25 years and Shariah compliant mortgage fund before the final quarter of 2019. This comes as the start-up has recently raised CA$1.2 million (US$911,398) in its first seed round.
“As we start to pick up traction and as we move toward Series A, which we expect within the next six to 12 months, we want to not only expand to jurisdictions within Canada but also cross-border into the US, and get into other products,” Mohamad Sawwaf, the co-founder and CEO of Manzil, tells IFN Fintech.
The firm is looking at rolling out Shariah compliant car financing and wealth management solutions next, as well as Takaful insurance based upon its market research on appetite for Islamic financial products among Canada’s Muslim minority.
“The mortgage is the anchor right now but we can cross-sell into other products as well as build a fence around that client and offer them a full financial service solution that they won’t be able to get anywhere else,” Mohamad explains.
Despite Muslims accounting for only approximately 4% of its 37 million-strong population, the demand for Islamic financial products is immense: the Toronto Financial Services Alliance previously projected demand for Islamic mortgage to rise to over US$17 billion in 2020, almost nine times over a five-year period.
Muslim-friendly financial products are sorely lacking in the North American country, with only a few cooperative offering Shariah mortgages and a handful of investment managers providing Islamic funds.
A high barrier to entry and lack of Islamic finance experts have been identified as some of the main factors preventing more Shariah financial institutions from entering the Canadian market.
“Islamic finance is a very localized issue: what we are trying to do here is take eastern theology and meld it into western law – it is fitting a square peg into a round hole,” Mohamad opines.