In a nondescript Montreal office space last summer, Malik Yacoubi sat with his team watching real-time dashboards as the Bank of Canada hiked interest rates yet again. Mortgage application volumes across their platform dropped within hours—a pattern that would normally send shivers through Canada’s traditional lending institutions. But for Yacoubi, co-founder and CEO of digital mortgage platform Nesto, it presented an opportunity.
“When rates change, borrowers panic and then adapt,” Yacoubi told me during a recent interview. “Our technology lets us pivot faster than the big banks who have to update thousands of broker relationships and revise paper-based processes.”
Founded in 2018, Nesto has steadily carved out territory in a mortgage market traditionally dominated by Canada’s Big Six banks, which collectively control roughly 70% of the country’s $1.8 trillion mortgage market. The Montreal-based fintech has now facilitated over $1 billion in mortgage originations—a modest sum compared to giants like RBC or TD, but remarkable for a startup in a highly regulated space.
What makes Nesto’s growth intriguing isn’t just its numbers, but its timing. The company has expanded during one of the most challenging mortgage environments in recent Canadian history, with the average 5-year fixed mortgage rate climbing from around 2% in early 2021 to above 5% today.
“The traditional mortgage broker model hasn’t meaningfully changed in decades,” explains mortgage industry analyst Robert McLister. “You have thousands of independent brokers maintaining relationships with dozens of lenders, each with their own paperwork systems and approval processes. It’s why getting a mortgage feels like filling out tax forms from the 1990s.”
Nesto’s approach differs fundamentally. Rather than connecting borrowers with brokers who then shop for rates, the platform centralizes the entire process online. Borrowers complete a digital application, algorithms pre-qualify them across multiple lenders, and Nesto’s in-house mortgage advisors guide customers through approval and closing.
The company has secured $110 million in funding across three rounds, with backing from Diagram Ventures, Portage, and the Caisse de dépôt et placement du Québec. This capital has allowed Nesto to expand beyond just being a broker platform. In 2022, the company launched its own lending operation, becoming both matchmaker and direct lender.
“What we’re building is similar to what Rocket Mortgage did in the U.S.,” says Yacoubi, referencing America’s largest mortgage lender that pioneered online mortgage applications. “But Canada’s regulatory landscape is different, and Canadian consumers behave differently too.”
Those differences matter. Canada’s mortgage market features greater concentration among major banks, stricter stress test requirements for borrowers, and shorter mortgage renewal cycles compared to the 30-year fixed terms common in the U.S.
Data from Ratehub shows that while 67% of Canadians start their mortgage search online, only about 25% complete the entire process digitally. This gap represents both Nesto’s challenge and opportunity.
“The mortgage remains one of the most stressful and complex financial products most Canadians will ever purchase,” says personal finance educator Kelley Keehn. “Digital platforms need to balance automation with human reassurance, especially when you’re talking about the largest debt most people will ever take on.”
The company’s growth strategy hinges on this balance. While the application process is digital, Nesto employs licensed mortgage advisors who step in at crucial decision points. The platform also partnered with real estate marketplace Realtor.ca in 2021, positioning itself at the beginning of many homebuyers’ journeys.
Traditional lenders haven’t stood still. TD Bank launched its digital mortgage application platform in 2018, and RBC has invested heavily in its own online mortgage tools. CIBC acquired online lender Simplii Financial, while Scotiabank has been gradually digitizing its mortgage processes.
The competitive response is predictable. Canada’s major banks enjoy substantial advantages: massive existing customer bases, lower costs of capital, established brand trust, and integrated banking relationships that fintechs struggle to match.
“Banks are improving their digital experience, but they’re working with legacy systems and organizational structures that weren’t built for the digital age,” explains financial technology researcher Elizabeth Schwartz at the University of Toronto. “It’s like trying to teach an elephant to sprint.”
For now, Nesto occupies a middle ground between traditional brokers and bank direct lending—leveraging technology to reduce friction while maintaining human touchpoints for complex decisions. The company claims its operating costs are 40% lower than traditional mortgage brokers, savings it passes to consumers through rate discounts.
The road ahead contains both promise and peril. With housing affordability at crisis levels in many Canadian cities and interest rates remaining elevated, mortgage volumes have contracted significantly from their pandemic peaks. The Superintendent of Financial Institutions reports that new mortgage originations dropped 34% year-over-year in the first quarter of 2023.
For homebuyers, platforms like Nesto offer greater transparency in a market that has historically hidden true rates behind opaque negotiation processes. The company publishes all available rates online without requiring customer information first—a practice still uncommon among traditional lenders.
“Our industry has operated for decades on information asymmetry,” Yacoubi acknowledges. “The broker knows what rates are available, but the customer doesn’t. We’re trying to level that playing field.”
Whether Nesto becomes Canada’s Rocket Mortgage or settles into a niche role within the ecosystem remains uncertain. What’s clear is that mortgage lending—perhaps the most traditional corner of Canadian banking—is finally experiencing the digital transformation that has already reshaped payments, investing, and personal banking.
The true test for Nesto and similar fintech challengers will come when interest rates eventually normalize. Will their technological advantages translate into meaningful market share, or will Canada’s banking giants absorb the best innovations while maintaining their dominance?
As one mortgage industry veteran told me on condition of anonymity: “The big banks aren’t worried about losing the mortgage business to fintechs. They’re worried about losing the customer relationship that starts with the mortgage.”
For millions of Canadians navigating the country’s complex housing market, the competition can only be beneficial—bringing more transparency, faster processing, and potentially better rates to a financial product that touches more households than any other.
