For smart cities to thrive, interoperability is a must

October 9, 2018
Asia's smart cities are looking to open source platforms and emerging standards to increase efficiency and convenience—and sustain their development.

As has been discussed, most smart city efforts in Asia Pacific have efficiency improvement as a core driver—and “efficiency” usually means concerted efforts to rein in energy or water consumption, either directly, by monitoring and metering utility delivery, or indirectly, by managing the buildings and roads that contribute to electricity and fuel consumption. In this way, sustainable energy consumption has been a hallmark of Asia’s smart city efforts, whether it manifests in green and intelligent building design in Hong Kong and Singapore, or focused smart grid deployments in Australia and India.

But there is another facet to sustainable development in Asia Pacific’s smart city designs: establishing and promoting interoperability among the applications and platforms that govern communication between fast-proliferating intelligent devices. Two areas of particular concern have been in payment systems and Internet of Things (IoT) management platforms.

The latter is particularly concerning for industry observers, given the critical importance placed on digitizing consumer and citizen transactions to increase efficiency, security, and convenience in smart cities. “Things used to be simple—we had cash and cards,” says Tobias Puehse, Vice President of Innovation Management for Digital Payments & Labs, Asia Pacific, at Mastercard. He says the rise of multiple payment infrastructures, and smartphones and other devices with competing payment applications, has meant that “too many options have been created, which have added complexity.” Puehse argues that rigorous adoption of open platform systems is essential to overcome this problem. While such systems (such as Hong Kong’s Octopus card platform) do exist elsewhere in “pre-smart” urban environments, Puehse believes the real game-changer is the introduction of “frictionless” payment systems embedded in mobile and other smart devices. These, he believes, will have the most substantial impact on a city’s payment infrastructure, paving the way for touchless digital payment systems that span cities and eventually countries.

Shenzhen, the hometown of Chinese Internet giant Tencent, has been practically transformed into a near-cashless economy over the last two years.

In other cases, good old-fashioned market forces have begun to create market leaders with overarching reach, giving rise to de facto standards. Ironically, given the Chinese government’s penchant for coordinated control of technology adoption, WeChat’s payment platform in China has emerged as a global leader in digital payments; Shenzhen, the hometown of Chinese Internet giant Tencent (WeChat’s parent company), has been practically transformed into a near-cashless economy over the last two years, as high-end retailers and noodle stall owners alike have adopted WeChat’s QR-code-based value transfer application for a sizable percentage of their sales.