How to build AI-powered cities intelligently
Cities like Melbourne have an opportunity to use AI and become a global leader by streamlining the complex processes involved in planning permissions and construction, for a start.
What makes Brisbane like Bangkok or Sydney like Shenzhen? Cities are distinct places with their own cultures, geography, attractions and vibe but when you look under the hood, the elements that make up the fabric of a city begin to look very similar.
From building sufficient housing and transport options, to traffic, crime, and waste management, modern cities all face similar challenges that only grow more complex as their populations increase. Given this complexity, it should be no surprise that GenAI is being rapidly embraced to manage and solve these problems.
In fact, according to Deloitte, ServiceNow, Nvidia, and ThoughtLab’s AI-Powered Cities of the Future Report, over half of the 250 cities surveyed are already utilising traditional AI to combat issues. Within three years this is projected to reach 83 per cent, with machine learning, robotic process automation, GenAI and Agentic AI solutions also set to increase in prevalence.
The report highlights how AI technologies can help cities overcome challenges more effectively and improve the quality of life for residents. It can empower cities to draw on vast sets of data in any format, easily retrieve information, and generate content and analysis instantaneously. Agentic AI, as it develops, will take this one step further by enabling AI technology to take actions on this information without human guidance.
But AI isn’t a set-and-forget strategy to solve all urban planning woes. Successfully implementing it requires leadership which in turn requires a clear strategy, deliberate action, and a top-down commitment to transformation.
AI leaders start with a well-defined vision and plan for transforming economies and urban activities through AI. These plans often originate at the national level and cascade down to cities.
Our report found that national programs can unlock larger budgets to support AI ambitions.
However, no city can lead in AI alone. The most successful AI-powered cities collaborate across the private, public, and nonprofit sectors. By sharing expertise, pooling resources, and expanding access to data and talent, they maximise AI’s potential.
Collaboration is key, but to turn AI ambitions into reality, cities need modern IT infrastructure. Integrating and securing data on a cloud-based platform enables cities to streamline operations and scale AI solutions seamlessly.
The most forward-thinking cities aren’t just scaling AI; they’re amplifying its impact by integrating it with other cutting-edge technologies. Melbourne is one of them, recently recognised for its leadership in AI-enabled sustainability initiatives.
Our report found that in Melbourne, AI is being integrated with IoT, data analytics and 5G technologies to tackle future challenges. One of the ways it’s doing this is through an AI-powered water management system that forecasts recycled water quality in real-time by combining historical data, machine learning algorithms and predictive analytics.
Melbourne also uses AI and sensors to monitor dangerous illegal waste dumping behaviour to gather and sort information about potentially dangerous items that have been thrown away. These use cases may seem small, but they go a long way to make public services more effective and cheaper, boosting overall quality of life.
So, what’s next for Melbourne if it is to elevate its status as a global leader?
One opportunity lies in an area where AI remains underutilised: streamlining the complex processes involved in planning permissions and construction. By cutting through red tape with AI-powered automation, Melbourne could speed up sustainable development and take another bold step forward in its smart city evolution.
Looking ahead to major sporting events in Melbourne – like the Australian Open – there’s also a valuable opportunity to accelerate AI adoption through advanced cybersecurity. For example, facial recognition technology at venue entrances could help verify the identities of athletes, staff, and media, reducing the risk of fraud and contributing to a safer experience across the city.
However, AI isn’t a fix-all solution. As its adoption accelerates, so do the risks.
With cities relying more on AI-driven insights from connected IoT devices and other sources, their exposure to security threats grows. Forward-thinking AI leaders take a proactive approach, deploying advanced cybersecurity tools to safeguard sensitive data and uphold public trust. Without strong cybersecurity, even the most innovative AI solutions risk being undermined by fear, misinformation or misuse.
Beyond security, cities must navigate the complexities of safe and trustworthy AI. While AI offers immense opportunities, it also raises concerns around bias, data breaches, misinformation, and loss of privacy. AI leaders can prepare for this now by implementing robust AI governance measures that ensure it is used responsibly, safely, and transparently.
Transformation isn’t just about technology – it’s about people.
AI is no longer a futuristic concept. It’s here, reshaping cities in real time right now. The next few years will define AI leadership and how cities scale successfully and pass on benefits to investors and citizens. Those cities that take a holistic approach to AI implementation, aligning vision, collaboration, IT infrastructure, and governance, will be best-positioned to thrive in an AI-powered world. The question is – how fast are leaders moving now?
Stu Scotis is National Leader for Generative AI at Deloitte Australia.
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