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A Tale of ‘Smart’ Cities

December 20, 2018, 2:07 pm
Bob Larkin

Today, over 54 percent of the world’s population resides in urban areas.[1] With 1.4 million people added to the urban population every week,[2] this number is estimated to rise to nearly 70 percent by 2050.[3] While this shift is poised to create immense opportunity for communities and businesses alike, it will also bring about new considerations in urban planning. Taxed energy systems and overcrowded mass transit are just a few of several issues that must be addressed in the dated infrastructure of urban areas today.[4] One of the most promising solutions for city planners is creating “smart” urban environments, or smart cities, that use technology to improve quality of life for residents and create better systems and structures to support urban growth.[5] Smart city technology will enable everyday objects to become intuitive and more connected, increasing the overall economic, social and environmental efficiency of the urban ecosystem.

Denver is known as one of the most innovative, forward-thinking cities in the country. Despite that, our city still faces many challenges, including:[6]

  • An annual 23 percent increase in population, with 10,000 to 15,000 new residents each year.
  • A 30 percent increase in the cost of living since 2010.
  • Increased traffic congestion, with 73 percent of trips taken by Single Occupancy Vehicles (SOV) in 2017 and more than 100 traffic-related deaths since January 2016.
  • Nearly 24 percent of residents living near or below the poverty line with limited mobility options.
  • Nearly one in 10 residents suffering from asthma, with 53 percent of residents reporting air quality as poor.

Smart city initiatives can help address these issues by:

  • Integrating technology into the built environment: Using data and modeling alongside identified residents’ pain points to look at problems holistically and provide lasting solutions.
  • Decreasing the percentage of Single Occupancy Vehicles (SOVs) in Denver by improving mass transit.
  • Using intelligent transportation systems and public safety systems to reduce, detect and prevent traffic accidents.
  • Providing easier access to city services to Mitigate residents’ day-to-day stressors.
  • Improving air quality by encouraging use of public transportation..

The market opportunity in this space is tremendous. According to a report from Persistence Market Research, the smart cities market, comprised of transportation, utilities, buildings and smart citizen services, is expected to reach $3.48 trillion by the year 2026.[7] The digitization of cities will affect everything from energy and housing to education and healthcare. The ultimate objective for a smart city, however, is for these industries to be interconnected under one centralized “brain” that allows them to work together.[8] Smart cities will require intelligent infrastructure, public-private partnerships and accessibility for residents to succeed in today’s rapidly growing urban landscape.

“Smart” Infrastructure

Until recently, infrastructure referred solely to physical assets such as roads, streetlights and sewers. However, according to Bank of America Merrill Lynch, as cities continue to modernize, it is important to consider smart infrastructure as the invisible data networks that connect, enhance and control physical fixtures.[9] These include:

  • Smart Offices: Smart offices can leverage automation systems to monitor and control operations to improve lighting, AC, air quality and employee security.
  • Water Monitoring Systems: Underground water infrastructure can monitor and diagnose problems such as leaks and stoppages, take preemptive measures to manage maintenance, and optimize water distribution.
  • Connected Cars: Soon, self-driving cars will shuttle people in and out of the city so they can multi-task with work or other activities. Smart parking meters can also inform drivers of parking availability.

With the advancement of the 5G network, a key smart city enabler, smart infrastructure will be supported by high-speed connection, quicker response times and increased data storage capacity.[10]

The Power of Public-Private Partnership

Putting smart technologies to work in cities will require a new level of partnership among government, corporate and investor stakeholders. Organizations from a variety of sectors – such as construction, telecommunications and transportation – will play critical roles, as will relatively young industries such as artificial intelligence, clean tech, cybersecurity and renewable energy.[11] As reported by Bank of America Merrill Lynch, various global smart city initiatives are driven by public-private partnerships[12]:

  • Singapore is undergoing one of the world’s largest smart city rollouts with Smart Nation, a $2 billion program focused on large-scale data aggregation and transfer. This data network will be used by both government and businesses to offer services such as predictive healthcare and cashless transactions to Singapore city residents.
  • London,through partnership with FM Conway Ltd and parking technology specialist Smart Parking Limited, deployed Infrared SmartEye sensors to more than 3,000 parking spaces to determine parking availability and transmit the information to the ParkRight mobile app, providing drivers with a real-time map of available spaces.
  • Dallas Innovation Alliance (DIA), a private-public coalition including local government, corporations, civic organizations, NGOs and academia, joined forces to transform Dallas into ‘a forward-thinking, innovative smart global city.’ DIA’s initiatives include the creation of a connected ‘living lab’ and the installation of Smart LED light bulbs in the city to capture real-time data on air quality and traffic congestion.  

Accessibility and Personalization

To create a sustainable urban environment, city planners must ensure smart city technologies are accessible to residents. Through smartphones, TVs, tablets and wearable devices, residents must not only be aware of, but also comfortable with, the smart infrastructure around them.[13]  From individualized temperature and lighting controls, to customized retail experiences, no two lives in smart cities will be the same.[14]  Voice assistants, “smart” signage and responsive streets in smart cities will allow people of all ages and abilities to thrive in the urban ecosystem.[15]

Smart cities have the potential to reduce the negative impact of urban population growth by employing technology to lower energy usage, reduce traffic delays and stem water loss.[16] By implementing smart technologies, business leaders and local governments can form public-private partnerships to reshape urban environments and fuel economic growth. Investment in the modernization of cities, while crucial in facing short-term urban challenges, will also lay the foundation for a more sustainable place to live, work and do business for future generations.

# # #

Bank of America Merrill Lynch is the marketing name for the global banking and global markets businesses of Bank of America Corporation. Lending, derivatives, and other commercial banking activities are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., Member FDIC. Securities, strategic advisory, and other investment banking activities are performed globally by investment banking affiliates of Bank of America Corporation (“Investment Banking Affiliates”), including, in the United States, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Merrill Lynch Professional Clearing Corp., both of which are registered broker-dealers and Members of SIPC, and, in other jurisdictions, by locally registered entities. Merrill Lynch, Pierce, Fenner & Smith Incorporated and Merrill Lynch Professional Clearing Corp. are registered as futures commission merchants with the CFTC and are members of the NFA. Investment products offered by Investment Banking Affiliates: Are Not FDIC Insured • May Lose Value • Are Not Bank Guaranteed. 

©2018 Bank of America Corporation

Bob Larkin is Senior Vice President, Global Commercial Banking, Bank of America Merrill Lynch.

[1] United Nations, 2015.

[2] United Nations, 2014.

[3] United Nations World Urbanization Prospects, 2014.

[4] Bank of America Merrill Lynch, 2018.

[5] Bank of America Merrill Lynch, 2018.

[6] City and County of Denver, 2018.

[7] Persistence Market Research, 2017.

[8] Bank of America Merrill Lynch, 2018.

[9] Bank of America Merrill Lynch, 2018.

[10] Booz Allen Hamilton, 2017.

[11] Bank of America Merrill Lynch, 2018.

[12] Bank of America Merrill Lynch, 2018.

[13] Booz Allen Hamilton, 2017.

[14] Bank of America Merrill Lynch, 2018.

[15] Bank of America Merrill Lynch, 2018.

[16] United Nations, 2014.

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