Think about the various apps on your phone. Maybe you have an app that hails a cab, or purchases movie tickets, or reserves you a table at a restaurant. Did you ever consider how these apps perform your request so seamlessly? Behind the scenes, a network of APIs (application programming interface) and webhooks facilitate the exchange of information required to perform these functions.


An API allows one software application to securely communicate and exchange data with another application over the internet. APIs are intended to be reliable and straightforward pipelines to application data. With these pipelines laid, software developers can build products and services that integrate effectively into a given service. In its purest form, an API consists of a request for data, and a response to said request. For example, when you search a travel website for plane tickets, the travel site uses an API to request data from the airline company. The Airline company responds with the data requested — in this circumstance, flight availability.


A webhook, however, works via an API, but it changes the way information is communicated.  With a simple API, data is passed only when requested by the application, whereas a webhook pushes data automatically whenever specific parameters are met. To illustrate, let’s use our travel website example. Whereas an API provides you with a one-time snapshot when searching flight availability, a webhook might be used once you book your ticket to update you on flight status or gate changes. In this case, your travel app has not asked the airline for that information, but their webhook has sent you the information when triggered by a gate change or flight delay. Webhooks are beneficial when real-time updates are needed, but there isn’t the need for constant data exchanges.


To you as the end user, there isn’t much difference between an API and webhook. From your perspective, information arrives on your phone as if by magic. But let’s translate this into simpler terms. Imagine you are buying a home. You’ve sent everything necessary to qualify for a mortgage to the lender, and you are awaiting a response. You could call every five minutes to check on the status of your loan, or you could wait until the lender has news for you. In this example, calling every five minutes is similar to an API, and waiting for the lender to call you is like a webhook. Both give you the expected outcome, i.e., the status of your loan, but the former – calling every five minutes – is far more labor intensive.  Moving the analogy back to a data-intensive app, you might think that since a ‘computer is doing the calling, what’s the difference’ – right? Wrong. Computers, like humans, demand bandwidth with every function they perform. If you can program your computer to wait and listen for a response rather than perform a request every minute, then your computer will be free to do other things.  In other words, webhooks are a more efficient way to pass information back and forth than APIs alone.


Recognizing the efficiency gains made with webhooks, LoanBeam has opted to build them into our current API.  This technology enhancement improves several aspects of loan origination system (LOS), point of sale system (POS), and lender integrations. For one, it improves software integration by 30%, as there is no need to deal with polling for data or creating download GUIDs (globally unique identifiers). Further, it provides faster access to data.  By eliminating polling, lenders receive application meta-data and income calculations immediately after income has been calculated, rather than waiting for the next API request. Overall, it offers lenders tremendous efficiency gains and cost savings both in integration and continued data exchange.


To summarize, APIs and webhooks shouldn’t be considered different protocols. Webhooks are merely an enhancement to APIs which improve the way technologies communicate. APIs alone are nice, but can be inefficient. With webhooks, information can be passed more quickly, and with less burden on developers and the system. LoanBeam recognizes these benefits and has made significant updates to our integration tools to solve for them. Now customers can integrate with LoanBeam more easily than they ever have.


To learn more about how LoanBeam can integrate with your current technology, or its ability to automatically extract, calculate, and verify qualifying income, join us for a LIVE PRODUCT DEMONSTRATION.