At a glance
- The UK smart cities industry is expected to be worth £26bn by 2020
- But what exactly are smart cities, and how do they affect businesses?
- Here, we explore the smart city phenomenon and examine what it means for brokers’ SME customers
Do you live in a smart city? Would you even know what one looked like? If you are unsure – don’t worry, you are not alone.
A recent survey found that 96% of people in the UK are unaware of a single smart city initiative being run where they live. The government, however, is committed to making the UK a world leader in smart cities, and predicts the UK smart cities industry could be worth more than £26 billon by 2020.
So what are smart cities, and why should they interest SMEs?
Defining a smart city
Smart cities are places where digital technology is used to collect and interpret huge amounts of real-time data, in order to address wide-ranging challenges, from traffic management to energy conservation.
Two simple examples of smart city developments are smartphone apps that can tell drivers how many spaces are available in their nearest car parks, so they can avoid spending unnecessary time on the roads, and intelligent street lighting systems that can turn on or off depending on whether anybody is nearby.
In the UK, Glasgow, Milton Keynes and Bristol have all been identified as emerging smart cities.
Helen Jales, Zurich’s Head of Strategic Propositions, says: “The smart city concept is about using technology to make our cities more effective, efficient and energy conscious, and to make our lives run more smoothly.”
How do smart cities benefit SMEs?
There are a number of ways in which SMEs can directly benefit from the growing reach of smart cities.
Smart traffic management systems can improve traffic flow and reduce congestion, which could have significant benefits for SMEs. It is estimated congestion costs the UK economy £17 billion a year, and that a 5% reduction in travel time could save businesses £2.5 billion annually.
In Newcastle, a smart traffic lights trial was launched earlier this year, in which lights at a series of key junctions were fitted with technology that can send status information to in-vehicle devices. The information can advise drivers, for example, that if they travel at a certain speed, they will arrive at the next three or four sets of lights when they are green. Alerts are also being sent to drivers about problems on the roads ahead, such as congestion, accidents or broken-down vehicles.
Smart cities – opportunities and challenges for SMEs
Smart cities represent a real business opportunity for SMEs. The global market for smart city solutions – from traffic light sensors to smartphone apps – and the additional services required to deploy them, such as cloud storage, could be worth £264 billion per year by 2020.
SMEs should be thinking about how they could use smart city technologies in their daily business lives,”
Helen Jales, Head of Strategic Propositions, Zurich
SMEs providing such solutions would need to consider their potential liabilities. For example, if a network of traffic light sensors designed to smooth traffic flow failed, or was hacked by cyber criminals, the consequences could be increased congestion or potentially a serious accident. An SME would need to consider what would happen if the incident could be traced back to a design fault they were responsible for, or a cyber-security incident they did not adequately protect themselves against.
While not every SME will be involved in developing smart city solutions, the crucial message for you to share with customers is that every business will be affected in some way.
Smart cities affect every business
The UK population is expected to rise by almost 10 million over the next 25 years and the extra pressure being placed on our infrastructure and resources can only increase the demand for new innovations and technologies that will hasten the growth of smart cities.
When deciding where to base their business, SMEs may start to consider how smart or connected a city is, to be just as important as traditional business considerations, such as transport links and business rates.
For now, though, the focus for SMEs should be on how these emerging technologies can benefit them.
“SMEs could start considering how they could use smart city technologies in their daily business lives,” adds Helen.
For more information on this and other emerging risks, please speak to your local Zurich contact.