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Google confirms $1B investment into Africa, including subsea cable for faster internet

Image Credits: lex Tai/SOPA Images/LightRocket / Getty Images

The developing world represents the best chance of growth for large internet companies, and today one of the very biggest set out its strategy for how it plans to tackle that.

Google said that it would be investing $1 billion to support “digital transformation” across Africa. This will include landing a subsea cable into the continent to enable faster internet speeds, low-interest loans for small businesses, equity investments into African startups, skills training and more.

The plans were unveiled today at an event led by Google and Alphabet CEO Sundar Pichai — putting the most senior executive at the company at the top of the event being a mark of the priority that the company is placing on the bet it’s making here.

“We’ve made huge strides together over the past decade — but there’s more work to do to make the internet accessible, affordable and useful for every African. Today I’m excited to reaffirm our commitment to the continent through an investment of $1 billion over five years to support Africa’s digital transformation, to cover a range of initiatives from improved connectivity to investment in startups,” said Pichai.

Google said it will inject the investment in projects to be implemented in countries across the continent, including Nigeria, Kenya, Uganda and Ghana.

The subsea cable will cut across South Africa, Namibia, Nigeria and St Helena, connecting Africa and Europe. It will provide approximately 20 times more network capacity than the last cable built to serve Africa, said the managing director for Google in Africa, Nitin Gajria.

“This will lead to a 21% reduction in internet prices and increase internet speed in Nigeria and almost triple in South Africa,” said Gajria.

The company said it will additionally disburse $10 million in low-interest loans to small businesses in Nigeria, Ghana, Kenya and South Africa, to alleviate hardships brought about by the COVID pandemic. This will be done in partnership with Kiva, a San-Francisco based nonprofit lending organization. It pledged $40 million to nonprofits improving lives in Africa.

“I am so inspired by the innovative African tech startup scene. In the last year we have seen more investment rounds into tech startups than ever before. I am of the firm belief that no one is better placed to solve Africa’s biggest problems than Africa’s young developers and startup founders. We look forward to deepening our partnership with, and support for, Africa’s innovators and entrepreneurs,” said Gajria.

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Google’s pivot away from bank accounts shows why finance is a tough industry for tech giants

Key Points

  • Google is shuttering its bank account product nearly two years after announcing ambitious plans to take on the retail finance industry.
  • One key factor: The new head of the business, Bill Ready, decided that he’d rather develop a digital banking and payments ecosystem instead of competing with banks, according to a person with knowledge of the decision.
  • Google may have ultimately decided it wasn’t worth antagonizing current and prospective customers for its various businesses, including cloud computing, according to a Friday research note from Wells Fargo banking analyst Mike Mayo.

At least one tech giant has decided it’s better to serve banks rather than taking them head on.

Google is shuttering its bank account product nearly two years after announcing ambitious plans to take on the retail finance industry. One key factor: The new head of the business, Bill Ready, decided that he’d rather develop a digital banking and payments ecosystem instead of competing with banks, according to a person with knowledge of the decision.

For the past few years, bank executives and investors have shuddered whenever a tech giant disclosed plans to break into finance. With good reason: Tech giants have access to hundreds of millions of users and their data and a track record for transforming industries like media and advertising.

At least one tech giant has decided it’s better to serve banks rather than taking them head on.

Google is shuttering its bank account product nearly two years after announcing ambitious plans to take on the retail finance industry. One key factor: The new head of the business, Bill Ready, decided that he’d rather develop a digital banking and payments ecosystem instead of competing with banks, according to a person with knowledge of the decision.

For the past few years, bank executives and investors have shuddered whenever a tech giant disclosed plans to break into finance. With good reason: Tech giants have access to hundreds of millions of users and their data and a track record for transforming industries like media and advertising.

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US Bank launches bitcoin custody service as institutions race to cater to crypto demand

Key Points
  • U.S. Bank, the fifth-biggest retail bank in the nation, announced Tuesday that its cryptocurrency custody service is available to fund managers, CNBC was first to report.
  • The offering will help investment managers store private keys for bitcoin, bitcoin cash and lite coin with the help of sub-custodian NYDIG, according to Gunjan Kedia, vice chair of the bank’s wealth management and investment services division.
  • Support for other coins like ethereum is expected over time, Kedia said.

The race to cater to institutional investors who want to wager on cryptocurrency is heating up.

U.S. Bank, the fifth-biggest retail bank in the nation, announced Tuesday that its cryptocurrency custody service is available to fund managers, CNBC was first to report.

The offering will help investment managers store private keys for bitcoin, bitcoin cash and litecoin with assistance from sub-custodian NYDIG, according to Gunjan Kedia, vice chair of the bank’s wealth management and investment services division. Support for other coins like ethereum is expected over time, Kedia said.

The move is the latest sign that established financial players are beginning to accept cryptocurrencies as a legitimate asset class. In the realm of custody banks, which verify and safeguard trillions of dollars of traditional assets for money managers, major players including Bank of New York Mellon, State Street and Northern Trust have all announced plans to custody digital assets.

“Our clients are getting very serious about the potential of cryptocurrency as a diversified asset class,” Kedia said in an interview. “I don’t believe there’s a single asset manager that isn’t thinking about it right now.”

U.S. Bank, which was founded during the Civil War in 1863, is a top 10 player in custody with more than $8.6 trillion in assets under custody and administration, according to data from the Federal Deposit Insurance Corp.

After a key regulator released a paper last year that established that national banks could custody crypto assets, Kedia surveyed the firm’s biggest clients to determine if their interest was genuine. She found that interest in crypto was broad and not limited to niche players, and that clients wanted the bank to move quickly.

“What we were hearing across the board, is that while every currency might not survive – there may not be room for thousands of coins— there’s something about the potential of this asset class and the underlying technology that would be prudent for us to stand up support for it,” she said.

Some investment clients already have positions in bitcoin, while others are waiting for custody services to begin, she said. U.S. Bank is one of the first institutions to have a live custody product available, Kedia said.

The price of bitcoin has whipsawed this year, surging to an all-time high of about $64,000 in April before losing half its value the next month. But the original cryptocurrency has proven to be resilient: It has weathered China’s move to ban the digital currency last month, and early Tuesday hit $50,000 once again.

There is irony in the fact that while bitcoin was created to cut out financial middlemen, swaths of the old financial order are being recreated to cater to digital currencies. After all, fund managers could choose to store their own cryptocurrency keys. But managers want the imprimatur of established names like U.S. Bank to help allay concerns from their own clients, Kedia said.

In order to onboard a manager into the crypto product, U.S. Bank has to trace the origin of the client’s funds in the industry’s standard anti-money laundering and “Know Your Client” checks, she said.

The product is only for institutional managers with private funds in the U.S. or Cayman Islands, according to the bank. But if and when the U.S. Securities and Exchange Commission approves a bitcoin ETF, demand is expected to rise.

“We have a lot of funds who are hoping to invest in ETFs,” Kedia said. “Some literally want custody contracts signed the day the SEC approves an ETF.”

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