Nesto's landmark raise and a Q2 rebound signal a more selective phase for mortgage fintech
Investment in Canadian fintechs neared US$1 billion in the first half of 2026, as a concentrated burst of second-quarter activity anchored by a landmark mortgage technology deal revealed investors prioritising scale-ready companies over volume.
According to KPMG International's H1'26 Pulse of Fintech report, compiled using PitchBook data, Canadian fintechs attracted US$996.7 million across 47 deals in the period. That's broadly stable against the US$1 billion across 56 deals recorded in the second half of 2025.
On a year-over-year basis, total deal activity fell more than 40% from the US$1.7 billion across 82 deals recorded in H1 2025.
Activity was skewed toward the final quarter of the half. Just US$375 million was deployed across 24 deals in Q1, compared with US$621.7 million across 23 deals in Q2.
The quarter's defining transaction was a US$218.6 million Series E investment in Montréal-based online mortgage lender Nesto, which the round valued at US$1 billion.
New investors included La Caisse (formerly CDPQ), Fidelity Investments Canada, PICTON Investments and Endeavor Catalyst, joining existing backers Portage, Diagram, NAventures, Fonds de solidarité FTQ and Fondaction.
Nesto reported more than $37 billion in mortgage originations in 2026 and manages over $80 billion in mortgages under administration across its three brands — Nesto, CMLS and Nesto Cloud.
Dubie Cunningham, a partner in KPMG Canada's Banking and Capital Markets practice, says the decline in deal count reflects deliberate prioritisation rather than a retreat from Canadian fintech.
"Canadian fintech has entered a selective maturation phase, with investors going after fewer deals but applying more scrutiny to their investments. They are being more discerning and going after fintechs that have scale, specialized AI capabilities and that are competitively positioned to take advantage of upcoming reforms to Canada's financial services industry," Cunningham said.
AI dominates deal activity
AI and machine learning-oriented fintechs attracted 19 investments in H1 2026, more than any other vertical. Digital assets ranked second, highlighted by Robinhood Markets Inc.'s US$168.4 million acquisition of Toronto-based WonderFi Technologies, owner of regulated cryptoasset platforms Bitbuy and Coinsquare.
Venture capital investment reached US$492.9 million across 33 deals in the half, with US$398.2 million deployed in Q2 alone.
Cunningham said capital is flowing to companies using AI to solve specific problems in lending, payments and deposit-taking, not broad digital experimentation.
Brokers navigating the competitive pressures of the open banking era will recognise that technology that accelerates client outcomes is drawing the most attention.
Regulatory reform as the next investment catalyst
Andrew Mathias, a partner in KPMG's Deal Advisory practice, says the Consumer-Driven Banking Act and the Real-Time Rail will reshape competitive dynamics in financial services, opening infrastructure that mortgage technology companies are already positioning to exploit.
"Consumer-Driven Banking and the Real-Time Rail are opening up the infrastructure that fintechs need to compete, and these regulatory reforms could materially alter fintech economics and create conditions for a new period of competition in financial services," Mathias said.
The two reforms are expected to lower the cost of new services, ease income and asset verification for mortgage applications, and reduce fintech dependence on incumbent institutions.
Mathias said the result will be more competition and consolidation across Canadian financial services over the next 12 to 18 months. Nesto's plans to accelerate AI-driven underwriting following its Series E are detailed in a separate Canadian Mortgage Professional analysis.
Globally, KPMG recorded US$103 billion invested across 2,098 fintech deals in H1 2026, with US$81 billion concentrated in the United States.
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