Partnership sees broker channel given rate parity with direct-to-consumer offerings
Good timing and a clear synergy between the M3 Group and nesto were key factors behind the strategic alliance announced last week that will see the lender distribute mortgages through the broker channel, executives at both companies told Canadian Mortgage Professional following the news.
The partnership will give brokers in the M3 network direct access to nesto through its BOSS platform, with a progressive rollout phase limited to its Elite brokerages across Canada before a wider expected launch in the coming months.
Chase Belair (pictured top left), co-founder and principal broker at nesto, told Canadian Mortgage Professional that the company had long been focused on moving into the broker channel, with the M3 opportunity emerging after a lengthy period of careful planning and preparation.
“We’ve been eyeing the broker channel for a long time. It was part of our initial discussions when we started the company,” he said. “For us, it was a matter of timing with regards to our resources. Being a startup, we need to make sure that when we decide to do something, we do it exceptionally well.
“With mortgage brokers, you only really have one chance to build that relationship and then turn it into a fruitful one – and we needed to make sure that our ducks were in a row, our resources were available, to make sure that tailoring our consumer-facing tech and process could successfully be transitioned to face the mortgage broker to help them serve their customer better.”
That led to discussions with M3 and its vice president, lender relations and lending solutions Éric Chamelot (pictured, top right), who was immediately clear about the potential a partnership could offer.
“We enjoyed, right out of the gate, two things with the team at nesto,” Chamelot told CMP. “One was the dynamic nature of the team and what they’re hoping to accomplish. That connects well with M3 and the folks that we have who are also very ambitious for our organization and for all our networks and brokers.
“When we recognize that in a partner, it always gets off to a great start. The second thing was… nesto does have something different in the way they’re going to service the brokers and the product offering that they have to offer as well. That made it all the more interesting for us because we really felt that we had a good partner that would actually give something more to our brokers.”
Belair described M3’s “obsession” with the mortgage broker experience as an invaluable asset, helping nesto tailor its approach to the channel and understand exactly what works and what doesn’t for high-performing brokers.
M3’s chairman and CEO Luc Bernard, meanwhile, said in remarks accompanying the news last week that nesto was a “natural fit” for what the network hoped to achieve.
Digital mortgage lender nesto has entered an exclusive brokerage services relationship with the M3 Group which will see the company distribute mortgages via the broker channel.
— Canadian Mortgage Professional Magazine (@CMPmagazine) January 25, 2024
Read more: https://t.co/s04OQSiHQc#breakingnews #mortgagelender #businessgrowth #brokernetwork
How the strategic alliance will work
In its initial phase, the partnership will see M3’s elite brokerages – roughly its top 2% – set up with a dedicated underwriter and onboarded with nesto before the company’s offerings are made available to the rest of the network’s brokers down the line.
The arrangement will see the broker channel provided rate parity, meaning it can offer the same rate as nesto’s direct-to-consumer side and avoiding the possibility of cross-channel sniping from the interest rate perspective.
That was a prominent discussion point between nesto and M3 throughout their conversations, according to Chamelot. “There can’t be two offerings out there. It just won’t work – the brokers will not go for it, because they’ll potentially be outbid by the same lender, direct to consumer,” he said. “And nesto recognized that from the get-go, so that helped forge a good partnership.”
Exclusivity, widening borrowers’ lender access among top takeaways
Chamelot described nesto’s decision to go with a progressive rollout as a wise one, with a managed approach to expansion helping ensure brokers have as smooth an early experience as possible – and underlined the exclusive nature of the agreement that’s been inked.
“We know that [nesto] is going to focus on delivering the great service that they’re set up to do with our network, and then eventually in the future we’ll see where that goes,” he said.
For Belair, more vendor options coming to market for Canadians through the broker channel is good news – particularly in Quebec, whose borrowers typically have access to fewer lenders than in the rest of Canada.
“And there’s no better partner in the province of Quebec than M3 when it comes to mortgages,” he said. “They are the giant and with access to 8,500 brokers across the country, it’s honestly the icing on the cake. I think it’s a great thing what M3 and nesto have done, bringing more lending diversity to Canadians.”
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