Manzil with Mohamad Sawwaf | E213

Creating access to Halal financial solutions.

On today’s episode of the Fintech Impact, Jason is going to talk to Mohamad Sawwaf, Co-founder and CEO of Manzil. Manzil is a Canadian-based Islamic banking and finance platform. Mohammed has appeared on another podcast, ‘Financial Planning For Canadian Business Owners’, to go over the fundamentals of Islamic finance and how they differ from traditional Western finance. But in today’s episode, he is going to talk about Islamic finance and how he is using Fintech as a platform for distributing Islamic finance in schools. 

Episode Highlights:

  • 0.48: Manzil was established based on a problem that has been ongoing not only personally but within the community concerning financial products, especially on the financing and investment side.

  • 1.15: Manzil was created to fill the gap of the 1.6 million Muslims here in Canada to get into homeownership and wealth management solutions and start to build their wealth for the first time.

  • 2.01: Financial inclusion and access to financial services are one of the big differentiators between successful nations and not successful nations, says Jason. 

  • 5.05: No one is talking about any desire to circumvent the tax code. It is to recognize that the tax code is designed to allow certain things like home purchases to happen in a way that is not going to be punitive from a tax perspective, says Jason. 

  • 5.50: Islamic finance isn’t just for Muslims. It is for everyone, and it is anonymous with structural finance, trade-based finance, or just even ethical finance. There are only a few main principles or don’ts of Islamic finance.

  • 8.27: Murabaha is a cost-plus situation. Therefore, this is the number one stipulation for entering into these transactions or focusing on asset-backed or asset-based transactions.

  • 11.00: There is a massive misconception about recourse on the asset. If you have an asset that hasn’t fully paid off, you have full recourse on that asset. Sell it off, make yourself whole again, and give it back to the client whatever is left. There’s nothing wrong with that, says Sawwaf.

  • 12.07: All religions have rules around keeping your word, and recourse is not considered unjust.

  • 15.54: Jason asks, besides the fact that people needed access to many financial things, how are you using technology to enable them actually to get their hands on it?

  • 17.54: Jason asks, what else is lacking in the current ecosystem that needs to be brought to the table for people who need to borrow or operate in a whole all manner? 

  • 19.35: Funding and capital attraction into programs is a genuine big concern that we’re still solving. We do have access to retail-based capital, but at the institutional level, we need to get that good cost in place and launch this at scale, says Sawwaf.

  • 22.40: The endowment fund is the largest globally, and one of my friend who went to Harvard was getting a loan from the endowment fund. But the rules around him paying back are super egregious. So you cannot pay this back early even if you want to.

  • 28.02: For Sawwaf, the biggest challenge has just been overcoming the preconceived notions that people bring to the table about Islamic finance because it is all wrong.

  • 29.48: The community itself, with their support and then basically telling me that this is their only chance or their last chance they think in their last hope that something like this can come to full scale, is what gets me up in the morning, to be honest, says Sawwaf.

3 Key Points

  1. When you think about Islamic financial solutions, there is a religious component to how these structures are derived and executed in the marketplace. We can go over the theory, and in theory, everything sounds fine, says Sawwaf.

  2. 16.01: We are a 100% digital platform. This is the only way to penetrate our community across the country without establishing bricks and mortar, retail branches, or offices that the typical financial institution would do, explains Sawwaf.

  3. There are so many advisors down there who specialize in dealing with student debt because every program in a word for forgiveness has all kinds of complexities. 

Tweetable Quotes

  • “You can’t take money from me because money lending in Islam is not a commodity. You can’t earn money from money, and it’s not allowed.” - Mohamad Sawwaf

  • “In Islam, you can invest or open up a business that doesn’t support the activities related to alcohol, defense, weapons, gambling, entertainment, or tobacco.” - Mohamad Sawwaf

  • “Christianity got around the usury laws within the Bible, which was to discount bonds originally.” – Jason

  • “Talk to me about the risk mitigation for the non-primary party in diminishing Musharakah or declining balance type of transaction.” – Jason

  • We have taken care of everything for you so that you can sleep peacefully at night, knowing that your finances are in order and in accordance with your faith.” - Mohamad Sawwaf

Resources Mentioned:

Fintech ImpactJason PereiraFintech