Mortgage Brokers: Lessons from the Ryanair Business Model

Mortgage Brokers often ask us - are one man bands or are big brokerage with more brokers more profitable? Drawing parallells here. The world's most expensive airline ticket is through Emirates $66,000 and the world's cheapest airline ticket is through Ryanair €15. For those who don't know - Ryanair, based in Ireland is one of Europe's largest low-cost carriers while Emirates headquartered in Dubai is recognized globally as a leading full-service airline. Yet, in 2022 Ryanair (US$1.4 billion) was more profitable than Emirates (US$296 million). What makes Ryanair's business model so successful?

Cost Leadership

Ryanair's Approach:

Ryanair's reduces its operational costs such as using secondary airports instead of the major airports and a single aircraft model fleet to lower maintenance costs. This allows Ryanair to keep it simple.

Application for Mortgage Brokers:

Mortgage brokers can adopt a similar cost-leadership mindset by streamlining their operations. This involves standardizing processes, automating repetitive tasks and negotiating better terms with lenders.

Product Offerings

Ryanair's Approach:

Ryanair simplifies its offerings by providing a no-frills service with additional paid options. This allows their customers to customize their experience according to their needs and budget.

Application for Mortgage Brokers:

Mortgage brokers can simplify their product offerings by focusing on a select range of loan products whose policies they understand deeply and can confidently recommend to their clients. This approach reduces the risk of information overload for both the broker and the clients making the decision process less unpredictable. Specializing in first home buyer (FHB) loans or commercial loans can position a broker as a go-to expert in that niche.

Ancillary Revenue

Ryanair's Approach:

A significant portion of Ryanair's revenue comes from ancillary services such as baggage fees, priority boarding charges and seat selection costs. These extras contribute to the airline's profitability.

Application for Mortgage Brokers:

Mortgage brokers can explore additional revenue streams beyond their standard Resi upfronts and trail commission-based model. This could include offering brokerage services, asset finance, personal loans, business loans and essential home and contents insurance providing genuine value to the client while generating additional income for the broker.

Prioritizing Customer Service

Ryanair's Approach:

Despite its budget model, Ryanair has made strides in improving customer service understanding that customer satisfaction is crucial for repeat business and word-of-mouth referrals.

Application for Mortgage Brokers:

Mortgage brokers can take a leaf out of Ryanair's book by ensuring high-quality customer service without significant cost increases. This could involve simple yet effective strategies like maintaining regular communication with clients through automated updates on their loan application status or offering personalized advice based on the client's financial situation. Enhancing the customer experience by being disciplined about repricing them every 6 months can lead to referrals and repeat business.

Lastly....

Ryanair have shorter flights (less than 2.5 hours) and have more flights (5 to 6) a day thus serving more customers. For mortgage brokers, the equivalent would be to do atleast 2 deals a week and take on vanilla loans that settle quicker. While such loans are not that common anymore, seek such leads from the original client who came to you.

Ryanair use data science to automate a grid and predict how and when to price their air tickets to win the pricing game. For a mortgage broker, that would be using Quickli - single platform that grids and holds all the servicing calculators together saving you the time and effort. This tool allows brokers to respond more quickly to market changes and client needs mirroring Ryanair's data-driven approach to pricing and customer service.

Conclusion

Ryanair's business model centered on cost efficiency, simplicity, ancillary revenue, and satisfactory customer service holds valuable lessons for mortgage brokers. The biggest brokerage does not mean the most profitable and the smallest one man band operation does not mean less cashflow.