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.

Quality of life has many dimensions, from the air residents breathe to how safe they feel walking the streets. The latest report from the McKinsey Global Institute (MGI), Smart cities: Digital solutions for a more livable future (PDF–6MB), analyzes how dozens of digital applications address these kinds of practical and very human concerns. It finds that cities can use smart technologies to improve some key quality-of-life indicators by 10 to 30 percent—numbers that translate into lives saved, fewer crime incidents, shorter commutes, a reduced health burden, and carbon emissions averted.

1. What makes a city smart?
2. Smart-city technologies have substantial unrealized potential to improve the urban quality of life
3. A look at current deployment in 50 cities around the world shows that even the most advanced still have a long way to go
4. Smart cities change the economics of infrastructure and create room for partnerships and private-sector participation

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 (Exhibit 1). 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 (see interactive). 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.

Technology is not a quick fix for crime, but agencies can use data to deploy scarce resources and personnel more effectively. Real-time crime mapping, for instance, utilizes statistical analysis to highlight patterns, while predictive policing goes a step further, anticipating crime to head off incidents before they occur. When incidents do occur, applications such as gunshot detection, smart surveillance, and home security systems can accelerate law-enforcement response. But data-driven policing has to be deployed in a way that protects civil liberties and avoids criminalizing specific neighborhoods or demographic groups.

Seconds count when lives are at stake, making speed critical for first responders in getting to the scene of emergencies. Smart systems can optimize call centers and field operations, while traffic-signal preemption gives emergency vehicles a clear driving path. These types of applications could cut emergency response times by 20 to 35 percent. A city with an already low response time of eight minutes could shave off almost two minutes. A city starting with an average response time of 50 minutes might be able to trim that by more than 17 minutes.

Smart-city technologies can make 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 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 with extensive, 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. Installing IoT sensors on existing physical infrastructure can help crews fix problems before they turn into breakdowns and delays.

Applications that ease road congestion are more effective in cities where driving is prevalent or where buses are the primary mode of transit. Intelligent syncing of traffic signals has the potential to reduce average commutes by more than 5 percent in developing cities where most people travel by bus. Real-time navigation alerts drivers to delays and helps them choose the fastest route. Smart-parking apps point them directly to available spots, eliminating time spent fruitlessly circling city blocks.

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.

Cities can use data and analytics to identify demographic groups with elevated risk profiles and target interventions more precisely. So-called mHealth interventions can send out lifesaving messages about vaccinations, sanitation, safe sex, and adherence to antiretroviral therapy regimens. In low-income cities with high infant-mortality rates, data-based interventions focused on maternal and child health alone could reduce DALYs by more than 5 percent. Another 5 percent reduction is possible if developing cities use infectious-disease surveillance systems to stay a step ahead of fast-moving epidemics. Telemedicine, which provides clinical consultations by videoconference, can also be lifesaving in low-income cities with doctor shortages.

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 emissionsby 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. Applications such as pay-as-you-throw digital tracking can reduce the volume of solid waste per capita by 10 to 20 percent. Overall, cities can save 25 to 80 liters of water per person each day and reduce unrecycled solid waste by 30 to 130 kilograms per person annually.

Air-quality sensors do not automatically address the causes of pollution, but they can identify the sources and provide the basis for further action. Beijing reduced deadly airborne pollutants by roughly 20 percent in less than a year by closely tracking the sources of pollution and regulating traffic and construction accordingly. Sharing real-time air-quality information with the public via smartphone apps enables individuals to take protective measures. This can reduce negative health effects by 3 to 15 percent, depending on current pollution levels.

Smart cities can create a new type of digital urban commons and enhance social connectedness

Community is hard to quantify, but MGI surveyed urban residents to determine if digital channels for communicating with local officials as well as digital platforms that facilitate real-world interactions (such as Meetup and Nextdoor) can have an impact. Our analysis suggests that using these types of applications could nearly double the share of residents who feel connected to the local community, and nearly triple the share who feel connected to local government.

Establishing channels for two-way communication between the public and local agencies could make city governments more responsive. Many city agencies maintain an active presence on social networks, and others have developed their own interactive citizen apps. In addition to disseminating information, these channels create vehicles for residents to report concerns, collect data, or weigh in on planning issues. Paris has implemented a participatory budget, inviting anyone to post project ideas and then holding online votes to decide which ones merit funding.