Smart City: What It Is, How It Works and What Benefits It Brings

24 March 2025

Circular Economy, Techstars, Innovation, Focus On

A Smart City uses technological innovation for quality of life by promoting sustainability, security and social inclusion for the benefit of citizens and businesses. Learn more about the meaning, features and benefits of the smart cities of the future

What is a Smart City and what is it for?

For many years, there has been talk of Smart Cities, even if the term is often used inaccurately and approximately to describe the evolution of urban areas, as it is utilized considering only the technological aspects or, sometimes, with an even futuristic connotation.

In reality, a Smart City leverages the potential of new technologies to be socially inclusive and human-centered, promotes sustainable development, and offers innovative solutions regarding mobility, infrastructure, pollution reduction, and energy resource management (pursuing self-sufficiency), thus improving the quality of life for its citizens.

The transition to Smart Cities is therefore necessary to address contemporary issues such as the climate emergency and population growth, especially since the United Nations predicts that by 2050, 70% of the world's population will live in increasingly large and highly densely populated urban centers, which will generate 40% of global pollution.

Definition of Smart City according to the European Commission

The concept of a Smart City has evolved in parallel with technological progress and digital transformation, with the European Commission providing a more precise definition of a Smart City, namely “a place that integrates physical, digital, and human systems into traditional networks and services to better use energy resources and reduce emissions for the benefit of citizens and businesses.” The European Commission's definition of a Smart City also clarifies that "a smart city goes beyond the use of digital technologies for better resource utilization and lower emissions."

For the European Commission, Smart City also means:

Smart urban transport networks.
Facilities that improve water supply and waste disposal.
More efficient ways of heating and lighting Smart Buildings through electrification and the use of renewable energy.
More interactive and responsive city administration.
Safer public spaces.

What are the characteristics of a Smart City

An intelligent city is therefore not only linked to the use of new technologies, with the main characteristics of a Smart City concerning six different dimensions:

Smart Governance. Intelligent administration is achievable thanks to greater connectivity and interactions between citizens, businesses, and other civil society factors, placing human capital, environmental resources, relationships, and community assets at the center.
Smart Economy. Intelligent urban economy and commerce aim to increase productivity and employment in the city, making it more attractive to startups, investors, and businesses, with sustainable economic growth that enhances its competitiveness.
Smart Environment. Sustainable development achievable by reducing waste production and environmental impact while simultaneously increasing energy efficiency.
Smart Mobility. Adoption of intelligent mobility solutions (from Sharing Mobility to integrated mobility, to autonomous driving), improving the quality of public transport through more efficient management, and, more generally, investments in new infrastructure to simultaneously reduce costs and the environmental impact of urban travel.
Smart Living. Greater social and digital inclusion of citizens, ensuring their well-being, paying attention to aspects such as elderly care, health, inclusion, safety, culture, and better living conditions.
Smart People. From intelligent education forms aimed at increasing employment to "permanent" training paths for all age groups, involving and actively participating citizens in decision-making processes.

How does a Smart City work

A Smart City works thanks to the massive use of sensors and IoT (Internet of Things) devices, i.e., everyday objects connected to the Internet through home connectivity, mobile networks, and public Wi-Fi, allowing the collection of a large amount of data.

In an intelligent city, in fact, data is analyzed with the growing contribution of technological innovations to improve infrastructure and simplify access to services - public and private - with a data-driven approach. This approach allows reducing pollution to improve the quality of life of those living in urban centers, thus facilitating the achievement of the UN's sustainable development goals.

woman on the phone in a hyper-connected context

What are the technologies used in smart cities?

To make a Smart City possible, innovation plays a fundamental role in pursuing goals such as sustainability and livability, consequently improving the quality of life for its inhabitants. In this sense, technologies such as IoT, Big Data, 5G, and Artificial Intelligence are not intended as standalone, as their integration and collaboration are necessary to achieve the goals and overcome various typical urban context issues.

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IoT and Smart City: Connection and monitoring

In fact, the Internet of Things is used massively and as an integral part of the concept of a smart city, as advanced sensors, allows connecting various devices such as traffic lights, vehicles (increasingly autonomous), smart systems, and everyday objects (like vases). In fact, IoT devices detect air quality and enable intelligent lighting.

For example, through the massive presence of IoT devices, it is possible to monitor traffic flows in real-time, optimize traffic management, smart traffic lights, and lane occupancy in heavy traffic conditions. Their use reduces road congestion, also mitigating the environmental impacts of traffic. Furthermore, Internet connectivity enables data collection and urban resource management.

5G: Advanced connectivity for Smart City

Connectivity is another crucial element for Smart Cities, and 5G for mobile networks is faster and more stable than the technologies that preceded it. Therefore, 5G is proposed as a fundamental infrastructure, also because it improves the efficiency of IoT devices.

In this perspective, through 5G it is possible to connect and collaborate simultaneously in real-time with various Internet of Things technologies. This allows implementing solutions such as autonomous vehicles and traffic flow management. Moreover, 5G helps the efficiency of services such as video surveillance, urban infrastructure monitoring, and energy resource management, also reducing operational costs and improving the responsiveness of local administrations when potentially critical events occur.

Artificial Intelligence: data analysis and intelligent decisions

Artificial Intelligence already plays an important role in Smart Cities and will increasingly do so. Thanks to AI, it is possible to quickly analyze the large amount of data collected by sensors and devices, allowing intelligent decisions to be made. AI algorithms, in fact, process data and predict traffic flows in various city arteries, as well as manage intelligent traffic lights, reducing waiting times in the logic of Intelligent Transportation Systems (ITS).

Furthermore, AI is the basis of autonomous vehicles that, in the future, will be able to avoid accidents and improve the management of public transport and "shared" transport means. Aritifical Intelligence applications in Smart Cities also concern the analysis of data from energy networks, improving overall efficiency, contributing to waste reduction, and improving waste management.

Big Data: Urban data collection, analysis and interpretation

Big Data are also needed within a Smart City, as it allows the collection, analysis, and subsequent interpretation of multiple data from sensors, IoT devices, and mobile apps, enabling informed decisions and improving a wide range of urban services.

In this sense, Big Data allows analyzing traffic patterns, citizen behaviors, and natural resource management optimally. Using machine learning and AI algorithms, Big Data also enables predictive analysis of traffic flows or, for example, energy and water consumption, anticipating possible emergencies before they occur.

Blockchain and Digital Twins: Innovations for the future of Smart City

In a Smart City, Blockchain and Digital Twins are also used. Blockchain, in fact, ensures transparency, security, and decentralization of services, and its applications mainly concern the management of the urban supply chain - as it allows tracking public goods such as building materials and medicines - as well as enabling access to services with secure and unique identities that guarantee privacy.

Finally, Digital Twins are virtual replicas of Smart Cities updated in real-time. In this way, the "digital twins" of Smart Cities allow avoiding architectural barriers, promoting inclusion, and simulating the impact that new buildings, possible changes to roadways, and solutions to improve energy efficiency or reduce pollution might have before making them concrete.

What are the advantages of the Smart City?

A Smart City offers several advantages to its inhabitants, with a set of factors that make intelligent cities sustainable, resilient, and circular. For example, a Smart City:

Promotes better energy efficiency aiming for self-sufficiency. Using intelligent technologies, smart cities can optimize energy use, reducing consumption and CO2 emissions, thus also improving air quality.
Optimizes waste management. Intelligent waste collection systems can improve the efficiency of collection and recycling, reducing environmental impact.
Promotes sustainable mobility. Smart Cities promote the use of ecological means of transport, such as bicycles and electric vehicles, and improve traffic management with intelligent traffic lights and advanced public transport systems.
Increases safety. The use of surveillance cameras, sensors, and data analysis can improve public safety, allowing a faster and more effective response to emergencies.
Improves quality of life. Intelligent services such as adaptive public lighting, water resource management, and high-speed Internet connectivity can improve the comfort and quality of life for people living in cities.
Stimulates citizen participation. Digital platforms allow citizens to actively participate in city management, reporting problems and contributing to administrative decisions through apps and online portals.

A Smart City is also more attractive and competitive than traditional urban centers, representing a determining factor for a country's growth, and leverages ICT (Information & Communication Technologies) to improve the quality of life for citizens.

Disadvantages and criticisms of Smart Cities

Despite the numerous advantages, Smart Cities could also involve disadvantages and criticisms, such as:

Privacy and data security. The massive use of sensors and connected devices can pose risks to citizens' privacy, while the collection and analysis of large amounts of personal data can be vulnerable and therefore subject to security breaches and abuses.
Costs. The realization of intelligent infrastructure requires significant investments, and consequently, the implementation and maintenance costs of a smart city can be high. It goes without saying that not all urban centers can bear these costs.
Social inequalities. Smart Cities technologies could accentuate existing inequalities, with poorer areas consequently at risk of not benefiting from the same levels of innovation and services offered in central areas, determining or widening the digital divide.
Technological dependence. Excessive dependence on technology can make cities vulnerable to technical failures, cyberattacks, and malfunctions, therefore the resilience of infrastructure is a non-negligible concern.
Environmental impact. The production and disposal of electronic devices that enable Smart Cities can generate a negative environmental impact, thus contributing to air pollution and the production of electronic waste.

How to create a Smart City: guidelines and strategies

To transform an urban center into a Smart City, it is necessary to design a path that integrates strategic planning, technological innovation, and the definition of intermediate objectives, with the active involvement of businesses and citizens equally relevant.

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Definition of objectives and understanding of the Smart City concept

The first step consists in understanding the concept of Smart City, i.e., using technologies to improve the quality of life, optimize resources, and make urban services more efficient, connecting innovation, sustainability, and inclusion. In this sense, objectives must be defined not only in the short and medium term but also in the long term, identifying the problems to be solved and establishing measurable goals to guide the development and implementation of the strategy.

Data collection, analysis and public-private synergy

Secondly, data must be collected through the technological component to assess the conditions of infrastructure, possible criticalities, and the potential of the urban center, in order to establish where to start the transformation path into a Smart City. In this phase, it is equally important to create a multidisciplinary working group composed of administrators, companies, universities, and citizens, as the success of the path is closely linked to public-private collaboration.

Roadmap, integrated strategy and alignment to the urban context

Subsequently, it is appropriate to define guidelines and roadmaps to develop an integrated strategy by creating specific project implementation teams, identifying the dimensions in which to intervene, and defining a constant progress monitoring methodology. The strategy must then be aligned with the pre-existing urban context, integrating the Smart vision of the city into territorial and urban planning policies and identifying the areas of intervention.

Implementation of technology, infrastructure and citizen involvement

A crucial step consists in technological and infrastructural implementation, with targeted interventions and the adoption of technologies that enable a Smart City, then actively involving citizens with apps and digital platforms that allow them to express opinions, monitor the progress of the intelligent transformation, and propose solutions, as active participation and awareness are essential for the success of Smart Cities.

The success of a Smart City also depends on public-private collaboration. For example, partnerships between municipalities and technological entities accelerate the transformation of urban contexts into Smart ities, as well as the contribution of structured innovative companies and startups. It is also important to attract private investments through public tenders or economic incentives, as well as to develop pilot projects that allow testing innovative solutions.

Monitoring, dynamism and sharing best practices

In the path of transforming an urban context into a Smart City, it is finally necessary to monitor the impact generated by the interventions by measuring the progress achieved to reach the defined strategic objectives. A path that, by necessity, must be dynamic, with interventions aimed at improving the strategy and intervening quickly in case of criticalities, simultaneously implementing solutions for sustainability, technological infrastructure, and data governance. Collaboration between different Smart Cities is equally relevant, as sharing best practices allows learning from each other's experiences, to the benefit of the involved realities.

Examples of Smart Cities in the world, in Europe, and in Italy

In the world and in Italy, there are several examples of successful Smart Cities that are redefining the concept of urban livability, combining technological innovation, sustainability, and active participation of citizens and businesses to project themselves towards a resilient and "intelligent" future.

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Singapore: Traffic management and Smart Water Grid

In this sense, Singapore represents a significant example of a global Smart City with cutting-edge technological infrastructure. The Asian city-state, in fact, is equipped with a traffic management system that, thanks to Artificial Intelligence and Big Data, optimizes transport flows, reducing both travel times and polluting emissions thanks to IoT sensors. Sensors also used for the "Smart Water Grid" project, which allows monitoring water leaks and has reduced water waste by 10%.

Zurich: Smart Building and digitalisation of public services

Another example of a Smart City is Zurich, for years the smartest city in Europe for various rankings. The Swiss Smart City, through targeted incentives, has facilitated the construction of Smart Buildings that, furthernore to not generating polluting emissions, significantly reduce energy consumption. In addition, the "Smart City Zurich" platform has launched and coordinated more than fifty digitization projects, simultaneously improving the efficiency of public services and response times when urban emergencies occur.

Barcelona: Superilles, IoT and waste management

Barcelona is also an important Smart City, and with the "superilles" project (in Italian superblocks, ed) has significantly reduced noise pollution while simultaneously increasing green areas. Moreover, in the Catalan capital, the use of IoT sensors for waste management has reduced collection costs by 15%, allowed public lighting to achieve energy savings of over 30%, and also made separate waste collection more efficient.

Milan: Sharing Cities and energy redevelopment

An example of a Smart City in Italy is Milan, although penalized in various world rankings by high air pollution. In this context, thanks to the European "Sharing Cities" project, private traffic has been reduced by 25%, with CO₂ emissions consequently decreased. Moreover, in the Lombard capital, energy efficiency interventions in public buildings have led to a significant reduction (over 30%) in energy consumption.

Florence: Sustainable Tourism and Smart Lighting

Florence is another Italian Smart City that stands out for its attention to tourism sustainability, and in this sense, has launched and implemented several digital platforms that monitor tourist flows, thus reducing overcrowding in the most critical areas. Moreover, through the "Smart Lighting" project, the Tuscan capital has reduced energy consumption by over 25%, simultaneously improving the city lighting system in high pedestrian density areas.

Turin: Innovative ecosystem, 5G and environmental monitoring

Turin, among the globally growing innovative ecosystems, has started the transformation into a Smart City. For example, 5G mobile connectivity has improved traffic management, significantly shortening urban travel times thanks to real-time communication between vehicles and intelligent traffic lights, while environmental parameter monitoring systems have led to a significant reduction in CO₂ emissions.

Intesa Sanpaolo Innovation Center and Smart Cities: Techstars Transformative World accelleration program

Innovation therefore plays a fundamental role for Smart Cities, thanks to technological solutions developed by startups and, more generally, thanks to the paradigm of Open Innovation. In this context, Intesa Sanpaolo Innovation Center contributes to the development of Smart Cities as a partner of the international acceleration program “Techstars Transformative World”, dedicated to technologies for a changing world and promoted by the American company Techstars, one of the leading in the sector worldwide.

The accelerator, now in its second edition - started on February 24, 2025, at the OGR in Turin with 12 startups, six Italian and six international -, represents the evolution of the previous ones dedicated to Smart Mobility and Smart City launched in 2019, is managed by Techstars and supported by Intesa Sanpaolo Innovation Center, Fondazione CRT, and Fondazione Compagnia di San Paolo, with the active participation of the Municipality of Turin and local companies.

Considering all six years of activity, the program has positioned itself as one of the leading accelerators in Europe, supporting over a hundred innovative entities that have collectively raised more than 120 million dollars in investments, created over 600 new jobs, signed 80 agreements for POC (Proof of Concept), and achieved 3 exits.