Livable future:

"Smart Cities"

As cities get smarter, they are becoming more livable and more responsive—and today we are seeing only a preview of what technology could eventually do in the urban environment. Until recently, city leaders thought of smart technologies primarily as tools for becoming more efficient behind the scenes. Now technology is being injected more directly into the lives of residents. Smartphones have become the keys to the city, putting instant information about transit, traffic, health services, safety alerts, and community news into millions of hands.

Today, cities are moving beyond the pilot stage and using data and digital technologies to deliver results that are more relevant and meaningful to residents. After a decade of trial and error, municipal leaders are realizing that smart-city strategies start with people, not technology. “Smartness” is not just about installing digital interfaces in traditional infrastructure or streamlining city operations. It is also about using technology and data purposefully to make better decisions and deliver a better quality of life.

What makes a city smart?

Smart cities put data and digital technology to work to make better decisions and improve the quality of life. More comprehensive, real-time data gives agencies the ability to watch events as they unfold, understand how demand patterns are changing, and respond with faster and lower-cost solutions. Three layers work together to make a smart city hum. First is the technology base, which includes a critical mass of smartphones and sensors connected by high-speed communication networks. The second layer consists of specific applications. Translating raw data into alerts, insight, and action requires the right tools, and this is where technology providers and app developers come in. The third layer is usage by cities, companies, and the public. Many applications succeed only if they are widely adopted and manage to change behavior. They encourage people to use transit during off-hours, to change routes, to use less energy and water, and to do so at different times of day, and to reduce strains on the healthcare system through preventive self-care.

Smart-city technologies have substantial unrealized potential to improve the urban quality of life. MGI assessed how smart-city applications could affect various quality-of-life dimensions: safety, time and convenience, health, environmental quality, social connectedness, and civic participation, jobs, and the cost of living. The wide range of outcomes reflects the fact that applications perform differently from city to city, depending on factors such as legacy infrastructure systems and on baseline starting points.

Applications can help cities fight crime and improve other aspects of public safety. Deploying a range of applications to their maximum effect could potentially reduce fatalities (from homicide, road traffic, and fires) by 8 to 10 percent. In a high-crime city with a population of five million, this could mean saving up to 300 lives each year. Incidents of assault, robbery, burglary, and auto theft could be lowered by 30 to 40 percent. On top of these metrics are the incalculable benefits of giving residents freedom of movement and peace of mind.

Daily commutes faster and less frustrating

Tens of millions of people in cities worldwide begin and end every workday fuming in traffic or piling into overcrowded buses and trains. Improving the daily commute is critical to the quality of life.

By 2025, cities that deploy smart-mobility applications have the potential to cut commuting times by 15 to 20 percent on average, with some people enjoying even larger reductions. The potential associated with each application is highly variable, depending on each city’s density, existing transit infrastructure, and commuting patterns. In a dense city with extensive transit, smart technologies could save the average commuter almost 15 minutes a day. In a developing city with more grueling commutes, the improvement might be 20 to 30 minutes every day.
In general, cities’ well-used transit systems benefit from applications that streamline the experience for riders. Using digital signage or mobile apps to deliver real-time information about delays enables riders to adjust their routes on the fly.

Cities can be catalysts for better health

The sheer density of cities makes them critical although currently underutilized platforms for addressing health. Recognizing that the role of technology in healthcare is broad and evolving by the day, we analyze only digital applications that offer cities room to play a role. We quantify their potential impact on disability-adjusted life years (DALYs), the primary metric used by the World Health Organization to convey the global disease burden, reflecting not only years of life lost to early death but also productive and healthy life lost to disability or incapacity. If cities deploy the applications included in our analyses to their fullest effect, we see the potential to reduce DALYs by 8 to 15 percent.

Applications that help prevent, treat, and monitor chronic conditions, such as diabetes or cardiovascular disease, could make the biggest difference in the developed world. Remote-patient-monitoring systems have the potential to reduce the health burden in high-income cities by more than 4 percent. These systems use digital devices to take vital readings, then transmit them securely to doctors in another location for assessment. This data can alert both patient and doctor when early intervention is needed, heading off complications and hospitalizations.

Smart cities can deliver a cleaner and more sustainable environment

As urbanization, industrialization, and consumption grow, environmental pressures multiply. Applications such as building-automation systems, dynamic electricity pricing, and some mobility applications could combine to cut emissions by 10 to 15 percent.

Water-consumption tracking, which pairs advanced metering with digital feedback messages, can nudge people toward conservation and reduce consumption by 15 percent in cities where residential water usage is high. In many parts of the developing world, the biggest source of water waste is leakage from pipes. Deploying sensors and analytics can cut those losses by up to 25 percent. 

Smart cities change the economics of infrastructure and create room for partnerships and private-sector participation

Smart-city technologies help cities get more out of their assets, whether they have extensive legacy systems or are building from scratch. There is no getting around the need to invest in physical assets and maintenance, but smart technologies can add new capabilities as core components are upgraded.

Infrastructure investment once locked cities into capital-intensive and extremely long-term plans. Now, using the right combination of traditional construction and smart solutions, they can respond more dynamically to how demand is changing. If population growth surges in a far-flung neighborhood, adding a new subway or bus line with the accompanying fleet expansion may take years. By contrast, a privately operated on-demand minibus service could be up and running much faster. The city government does not have to be the sole funder and operator of every type of service and infrastructure system. While implementing most of the applications that we examined would fall to the public sector, the majority of the initial investment could come from private actors. Public financing may be reserved for only those public goods that must be provided by the government. Furthermore, more than half of the initial investment that needs to be made by the public sector would generate a positive financial return, which opens the door to partnerships.

Some cities are starting their transformations with inherent advantages such as wealth, density, and existing high-tech industries.