How does a city become a ‘smart city’? In the February Intelligence of Things (IoT) Tracker™, PYMNTS spoke with Ian Slater, SVP of enterprise partnerships for Mastercard, who challenges conventional wisdom about what it will take to make cities really smart. Plus, the latest IoT headlines and the top providers in the space.
How does a city get smart?
The road to becoming a smart city is a long one, but it begins by offering city residents greater connectivity and opening up smoother communication between residents and city officials.
A few urban areas around the world have taken the first steps needed to make these modern urban visions a reality. For example, in New York, mobile ticketing technology is making it easier for people to pay for rides on the MTA. In Dubai, the Smart Dubai program was launched in 2014 to transform Dubai into “the happiest city on Earth” and offers residents a “Happiness Meter” to track the initiative’s progress.
In an effort to help make smart cities a reality and simultaneously expand consumer access to modern banking solutions, financial services provider Mastercard has rolled out several smart city initiatives of its own around the world. In Singapore, the company is working with the country’s economic leaders to introduce solutions aimed at offering smoother business transactions, improving mobility and boosting tourism. Meanwhile, across the pond in London, a contactless payment solution from Mastercard has been integrated into London’s public transit system that allows commuters to quickly pay for their rides with a contactless payment card.
But these solutions are about more than offering citizens and commuters faster, easier access to city services. They are also about offering cities and municipalities greater connectivity and access to real-time data insights into the usage of these services. To better understand how these solutions are changing the way citizens and visitors interact with their cities, PYMNTS spoke with Ian Slater, senior vice president of enterprise partnerships for Mastercard. Slater, who is based in London, explained how integrating Intelligence of Things (IoT) solutions into the city’s urban infrastructure is helping boost engagement between city residents and city leaders and encouraging financial inclusion.
‘Smart’ vs. ‘dumb’ cities
Slater agreed that it is difficult to arrive at a consensus of what makes a smart city. But he offered his definition of the smart city’s antithesis: A dumb city.
“A dumb city is a city that presents a uniform set of facilities and services to its visitors and its citizens and takes no account of who they are, where they are or what the circumstances or environment that they exist in or the circumstances of that city at that particular time,” he said.
Slater said most cities around the world fall into the “dumb” category. But a handful of cities are taking the first steps necessary to address the needs of citizens, which will allow them to move away from the “dumb” category toward becoming a smart city.
But having a clearer vision of what does not make a smart city doesn’t necessarily make the definition of a smart city any clearer, said Slater. He pointed out that various companies and groups present different applications for smart cities at trade shows and events that include new IoT solutions for parking, sanitation and meter reading.
While these solutions are likely to have a place in a smart city, they are not a central defining characteristic of a smart city. Even with many elements available, a singular idea of a smart city remains elusive, he said.
“Trying to put a definition that wraps around all of those things is nigh impossible, other than to say [initiatives] should all be aimed at making that city more interactive, more efficient, more livable and more tailored to the needs of those who live within it,” he said.
When public transit goes contactless
So what would a smart city solution that addresses those items look like? Slater pointed to Mastercard’s integration of contactless payment solutions into London’s public transit system as an example.
The initiative, undertaken by Mastercard last year, was aimed at improving London’s Oyster ticketing system. The company determined that while contactless Oyster smart cards were useful for the city’s daily commuters, the system can create complications for infrequent riders, including roughly 19 million international visitors who travel to London every year and struggle to understand the system.
To address this issue, London officials had Mastercard integrate the company’s contactless payment solution in an effort to enhance the Oyster system’s capabilities. The solution allows commuters to use contactless cards to pay for rides without having to enter a PIN or signature. An official for Transport for London estimated the city has seen an annual savings of over £100 million since transitioning to contactless payments last year by slashing the money the agency paid in commissions to third parties.
Slater described the move by London officials to implement contactless ticketing into its public transportation system as politically risky because the city had to invest in infrastructure, hardware and education to make the new system work over several years, which would inevitably cause disruption for London’s commuter population. But by taking the risk, he said London has taken its first steps toward becoming a smart city.
“It takes a level of commitment and bravery for a city in terms of purchasing because that costs several tens of millions to do it without necessarily [having] the visibility of a payback,” he said.
But beyond the annual cost savings, Slater said the solution not only puts London closer to becoming a smarter city, it also puts its residents on a path to greater financial empowerment by encouraging them to gain access to digital banking tools. He said Mastercard also sees the move to integrate contactless payments into London’s infrastructure as a means of boosting financial inclusion for London’s residents. The company is aiming to extend its financial services to 500 million people by 2020.
Slater said London residents without bank accounts can use contactless payments using a prepaid card. This boosts residents’ financial inclusion by providing them access to a basic banking product and a means of receiving government benefits.
“Financial inclusion, access to relevant financial products, is a universal good for people,” Slater said. “It helps them get access to decent banking. It helps them move away from a day-to-day, cash-based economy. It reduces their risk of crime. It helps people financially plan. It provides them access to relevant borrowing products. All the things people need to structure their financial life.”
Big Data is watching you
In addition to greater financial inclusion, Slater says offering an integrated solution into city infrastructure opens a dialogue between public transportation users and city leaders in the form of real-time data insights. Greater connectivity allows city officials to alert commuters about delays on trains or buses or could help reroute traffic around certain areas experiencing congestion.
The data also has broader applications for city leaders, Slater said. By looking at the data collected by the integrated solution, city officials can use the data to boost the local tourist industry.
“City tourism is a competitive business,” Slater said. “There are lots of places out there attracting that kind of high-spending tourist dollars, and cities need to make sure they are effectively targeting the sort of people coming from the right areas and with the right messaging.”
The data also provides greater communication between city leaders and citizens who live in the city year-round. With these integrated solutions embedded into infrastructure, city officials can gain a clearer idea of who their citizens are and how to tailor city services to fit their needs.
“Citizens or visitors just want to have a sensible dialogue with their cities,” Slater said. “They want their city to inform them about things that are happening.”
Strengthening that line of communication between citizens and city governments can help both parties become more informed. And improving the flow of information between citizens and cities is one of the first of many steps to making smarter cities a reality.
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About The Tracker
The PYMNTS.com Intelligence of Things Tracker™ showcases companies that are leading the way in all aspects of the Intelligence of Things. Every month, the Tracker looks at what these companies are doing across the ecosystem and in several categories, including Personal, Home, Retail, Transportation, Wearable, Mobile, Infrastructure, Data and more.