McKinsey global report shows social gains through smart city technology

09 July 2018 4 min. read

In a comprehensive global study of smart city applications by McKinsey, the strategy firm has concluded a significant range of social and environmental benefits for cities which adopt digital technologies.

According to the McKinsey Global Institute, cities are currently home to more than half the world’s population, and are expected to play host to an additional 2.5 billion residents in just three decades from now – with the increased infrastructural and environment strain threatening a reduction in quality of life. As such, the McKinsey think-tank undertook an in-depth analysis on the application of smart city technology as a means to address the upcoming challenge.

It all starts with data, the firm says in its concluding Smart Cities report: “Cities, in all their complexity and scope, generate oceans of it.” Harnessing that trove of data, smart cities add digital applications to urban design, increasing efficiency and reducing waste in a cost-effective manner across a wide range of community services such as transport, health, policing and utilities.

Cities, naturally, compete. A recent report from Oxford Economics projected cities in Asia to account for nearly half of all global economic activity in under twenty years. Livable cities attract multinational enterprise and human capital, and, as noted in the McKinsey report, the ideal of a smart city as such is to improve the lives of its citizens: “Becoming a smart city is not a goal but a means to an end. The entire point is to respond more effectively and dynamically to the needs and desires of residents. Technology is simply a tool to optimise the infrastructure, resources, and spaces they share.”The impact of smart city technologies on key social indicatorsWith that perspective in mind, the study authors focused in on the achievable impacts by 2025 of existing smart city technologies on a range of quality of life indicators, finding an improvement in some key dimensions by up to 30 percent or more – including as to a reduction in fatalities and crime, shorter commuting times, a lowered health burden, and a better environmental footprint with less wastage and emissions.

Assuming an aspirational but realistic adoption level by cities and citizens, with a focus on the areas where the authors felt smart technologies could have a clear, attributable impact, the study assessed over 60 different current applications across the domains of healthcare, security, mobility, economic development, housing, community engagement, and energy, water and waste – measured in turn against a range of corresponding social metrics, with many tools impacting in multiple areas.

As a basic breakdown, with the distinct characteristics of individual cities affecting the performance of certain technologies and overall outcomes, the study concluded a 10-30 percent improvement on baseline measures from the time of smart technology introduction in most of the key quality of life indicators, with the reduction in crime pushing out to a potential 40 percent. In other categories, commute times can drop by up to 20 percent, greenhouse emissions by 15 percent, and water consumption by 20 percent, while the disease burden and accidental fatalities can be reduced by a respective 15 and 10 percent.The reduction in commute times through smart city technologyZooming in on just one aspect of the findings, urban mobility and commute times – a particularly challenging issue for many Asian cities – the McKinsey report concluded that cities which deploy the full suite of currently available intelligent mobility applications in areas such as traffic management and public transit could potentially cut average commute times by 15–20 percent – which, for the average commuter, would save 15 to 30 minutes every day.

This is significant, on a personal level, adding up to four full days per year for individuals, as well as in an economic productivity respect – with estimates of up to 2 to 5 percent of national GDP lost in some parts of Asia due to heavy traffic congestion, and Bangkok, Jakarta and Manila ranking among the top-most gridlocked cities anywhere in the world. Smart applications which can have the greatest impact on commute times include real-time public transit information and predictive network maintenance, as well as intelligent traffic signals and dynamic parking systems – in turn, helping to reduce personal expenses and decrease greenhouse emissions.