The future of cities: Is digitalisation the solution for urban challenges?

By 2050, it is expected that nearly 70 per cent of the world’s population will live in cities. The cities of the future are likely to be massive urban conurbations, expected to swell to double their size by 2070 due to continuing migration. And as long as cities continue to be the growth engines of economies, generating more than 80 per cent of global GDP, they will keep growing.

However, this growth triggers several environmental and systemic challenges. Nearly one billion urban poor live in substandard housing, in unsafe and unsanitary conditions – a paradox termed ‘great city, terrible place’ by the urbanist Charles Correa.

The pandemic served to bring many of these challenges into sharp focus. Vulnerable populations have little to no access to urban infrastructure and services. Conversely, increased urbanisation and short-term self-interest can lead to a tragedy of the commons. This can result from too much usage, in volume or intensity, of public assets such as parks or streets, leading to decreased quality. The World Economic Forum estimated that by 2040, the world is expected to face a $15 trillion ‘infrastructure gap’.

Municipal leaders and governments are turning to technology to play a more pivotal role in combating these challenges. Digitalisation, after all, has transformed several sectors. Enhancing future readiness by accelerating digital transformation is imperative for ‘citizen-customers.’

KPMG Lower Gulf, in collaboration with the World Government Summit (WGS), recently published a report, “Future of cities: Three principles for digital transformation in cities”. The report highlights how a strategic approach to urban digitalisation by governments and civic bodies can help cities be more resilient and achieve long-term growth.

Read KPMG’s Future of Cities report, launched in collaboration with the @WorldGovSummit, which explores the capabilities required to build agile urban environments while addressing governments' current and future needs.https://t.co/YcZNpPYXPr#futureofcities #smartcities

— KPMG Lower Gulf (@KPMG_LowerGulf) February 7, 2022

Smart digitalisation
The scope of smart digitalisation differs according to the urban context: from adopting basic automation technologies for public services to advanced analytics that anticipate challenges in infrastructure development. If deployed appropriately, smart digitalisation should not look the same in any two cities.

Underpinning all smart digitalisation plans are clear goals to guide funding, defined action plans and enhanced transparency. This blueprint must be adapted to local requirements and citizen-customer needs, which results in a differing manifestation from city to city. Promoting service optimisation, responsive delivery and end-to-end citizen-customer journeys must be the new norm for municipal services.

Urban residents and businesses increasingly view themselves as ‘citizen-customers’ with growing expectations of municipal services and their surrounding urban form. This is a group with varying socio-economic needs, and cities have the challenge of ensuring the needs of all their constituents are met – not just the most powerful or vocal.

To better manage their fiscal challenges and limited resources, cities can view themselves as companies serving a complex group of citizen-customers. Civic bodies have to adopt rigorous cost-benefit analyses of tech solutions, so that tech solutions can be applied more quickly and cost-effectively than in the past.

As citizen-customers’ needs are increasingly being taken into account, cities will shift to prioritising the ‘common good’ as they develop policies and programs, and rethink the urban form. Additionally, digitalisation and its wealth of data can equip cities with better tools to address unequal consumption of services.

However, technology is not a silver bullet for every urban problem. The focus should not be on the technology itself, but how it benefits citizen-customers. Unfocused digitalisation dedicates resources to technologies that are not ‘future flexible’ and do not address specific needs. Today’s smart decisions are those aligned with a city’s vision for tomorrow.

For example, Dubai created an app designed to capture citizen-customer happiness data in a consolidated city dashboard. Private sector and government entities can use it to evaluate citizen-customer experiences with live iterative data within industry sectors and geographic areas. It provided clear directions for service improvements.

Leapfrogging into the future
More than 440 emerging cities are expected to account for close to half of expected global GDP growth until 2025. The challenges they face include urban sprawl, immigration, population growth and unequal access to infrastructure; challenges that need to be addressed to maximise future economic potential.

‘Leapfrogging’ is the ability to bypass traditional development cycles by capitalising on established technologies. Emerging cities can transition rapidly to a knowledge-based and data-driven economy built on digital services and citizen-centered, smart ecosystems. A famous example of leapfrogging is the mobile revolution that connected millions of citizens in emerging markets; bypassing the need to invest in landline infrastructure, allowing them to get on the digital highway, improving access to online banking, healthcare and other public services.

But successful digital transformation requires strong, focused leadership. Municipal leaders must blend traditional ways of working with new skills to guide their cities into the future. The transformation can only take hold with a vision that mobilises people, creates conditions that enable digital maturity and attracts talent to the city.

New management frameworks are needed to account for tech risks, specifically technological evolution. Nobody knows what the future will hold and how cities, citizen-customers and governments will respond. A new generation of solutions is emerging that requires focused leadership to unlock potential. A balanced approach remains key to managing the shift from a centralised approach to a citizen-centric, decentralised model.

Fady Kassatly is the partner – head of Digital and Innovation Solution Group, KPMG Lower Gulf

Read: Here’s how to build a smart city of the future