How can cities use the sharing economy to solve urban problems?

The sharing economy at work. Image: Getty.

Technology is creating a new “sharing” or “collaborative” economy. Sites like AirBnB and TaskRabbit, and the ever-increasing number of crowdfunding platforms, are changing sector after sector of the economy.

Up till now, little attention has been paid to how these platforms can help to address environmental and social challenges. Yet, there are a range of ways in which the collaborative economy can help solve city challenges in particular – from reducing isolation to harnessing digital democracy platforms or involving citizens in spending decisions.

Pioneering cities like Amsterdam, Paris and Seoul, for example, have already driving through dedicated strategies for the collaborative economy. In embracing the principles that underpin the sharing economy and using their capabilities for urban challenges they are , in turn, building their reputations as “sharing cities”.

Sharing cities are not distinct from “smart” and “sustainable” cities: in fact, they clearly overlap with them. The main distinction is that sharing cities are currently self-identifying, sometimes with express political leadership.

For example, take Seoul, where Share Hub supports the city – led by mayor Park Won Soon – in its “Seoul Metropolitan Government Act for Promoting Sharing”. Amsterdam, on the other hand, which has been named the first “Sharing City” of Europe, was kick-started when grass-roots activity coalesced to form a movement. In this case the movement was initiated by shareNL, a knowledge and network platform for the sharing economy.

Lessons learned

For London or any UK city to do the same, it should begin with being clear on what type of relationship it wants to create between services delivered by the city and the collaborative platforms. At its simplest, this relationship can take two forms:

  • Citizen-to-city approaches that focus on integrating collaborative economy activities into how the city operates core activities, such as budgeting and planning; or
  • Citizen-to-citizen initiatives that focus on supporting platforms that enable citizens to help each other and improve life in the city, but are not integrated with city services.

Having an explicit and published vision of how the city will support the sharing economy, alongside a set of indicators to plot success, is a basic starting point. Ensuring regulation is up-to-date, flexible and can accommodate ad hoc disruptive business models is also a significant step to enabling a sharing city – demonstrating how the city welcomes new market entrants. And a city can only meaningfully support the acceleration of innovation in the sharing economy – and indeed other sectors – if it can provide leadership and coordination across city hall.

Building a public story about the positive value that can be created through the use of digital tools and technologies has been a key starting point for some cities. And there’s no doubt that for city leaders, political ownership of the sharing economy agenda is a key driver, when well supported by practical and policy interventions.


Efforts in Paris is a good example of this. In 2014, the city sought to open up its budgeting process through the “Madame Mayor I Have an Idea” initiative. The city has, overall, committed to opening up 5 per cent of the city’s investment budget (from a total of €426m, over the course of the current mayoral term) to ideas and votes by citizens.

Rolled out in two stages, the first version saw fifteen proposals put forward by the Paris City Council and some 40,000 votes cast. The next year, once a new dedicated website was launched, Parisians suggested over 5,000 ideas and more than 58,000 people voted – building public awareness and putting the infrastructure in place has been pivotal.

Collaborative economy platforms can also help mobilise people's knowledge, everyday possessions and time to make communities healthier and more connected. As part of its Sharing City agenda, Seoul has initiated projects that tap into dormant assets across the city, ranging from housing to hammers. Take, for example, its “Tool Kit Centres” which offer communities a shared space stocked with items such as tools and suitcases for residents to borrow. Importantly, Seoul has also opened up over 800 city-owned spaces for creative and productive purposes: new ventures need lots of things to flourish, with space to work and grow being key. 

Ultimately, there are many ways that collaborative economy platforms could be used to tackle the needs of people, families, communities and local governments. Closer to home, projects already underway in the UK that tap into the use of collaborative platforms for social good include the likes of Casserole Club and Shareyourmeal, which are being used to address loneliness and isolation, often amongst the elderly.

But for initiatives like these to scale in urban environments, city hall leaders and government policy-makers must be out in front. One positive step in this regard could be to convene important sectors of the collaborative economy – transport, space, time, goods and food – in an industry body or representative structure (or informal sectoral champions). Not only could such a group highlight barriers to policy-makers, the insurance industry and regulators alike; it could also generate awareness of the potential social value collaborative economy platforms could have for our cities.

Peter Baeck is head of collaborative economy research, and David Altabev a senior programme manager, at Nesta.

On 1 November 2016, Nesta will be hosting ShareLab, a one-day event bringing together over 200 policymakers, entrepreneurs, innovators and researchers to better understand how public services, civil society and the private sector can engage with, develop and harness collaborative platforms for good.

 
 
 
 

The ATM is 50. Here’s how a hole in the wall changed the world

The olden days. Image Lloyds Banking Group Archives & Museum.

Next time you withdraw money from a hole in the wall, consider singing a rendition of happy birthday. For today, the Automated Teller Machine (or ATM) celebrates its half century.

Fifty years ago, the first cash machine was put to work at the Enfield branch of Barclays Bank in London. Two days later, a Swedish device known as the Bankomat was in operation in Uppsala. And a couple of weeks after that, another one built by Chubb and Smith Industries was inaugurated in London by Westminster Bank (today part of RBS Group).

These events fired the starting gun for today’s self-service banking culture – long before the widespread acceptance of debit and credit cards. The success of the cash machine enabled people to make impromptu purchases, spend more money on weekend and evening leisure, and demand banking services when and where they wanted them. The infrastructure, systems and knowledge they spawned also enabled bankers to offer their customers point of sale terminals, and telephone and internet banking.

There was substantial media attention when these “robot cashiers” were launched. Banks promised their customers that the cash machine would liberate them from the shackles of business hours and banking at a single branch. But customers had to learn how to use – and remember – a PIN, perform a self-service transaction and trust a machine with their money.

People take these things for granted today, but when cash machines first appeared many had never before been in contact with advanced electronics.

And the system was far from perfect. Despite widespread demand, only bank customers considered to have “better credit” were offered the service. The early machines were also clunky, heavy (and dangerous) to move, insecure, unreliable, and seldom conveniently located.

Indeed, unlike today’s machines, the first ATMs could do only one thing: dispense a fixed amount of cash when activated by a paper token or bespoke plastic card issued to customers at retail branches during business hours. Once used, tokens would be stored by the machine so that branch staff could retrieve them and debit the appropriate accounts. The plastic cards, meanwhile, would have to be sent back to the customer by post. Needless to say, it took banks and technology companies years to agree common standards and finally deliver on their promise of 24/7 access to cash.

The globalisation effect

Estimates by RBR London concur with my research, suggesting that by 1970, there were still fewer than 1,500 of the machines around the world, concentrated in Europe, North America and Japan. But there were 40,000 by 1980 and a million by 2000.

A number of factors made this ATM explosion possible. First, sharing locations created more transaction volume at individual ATMs. This gave incentives for small and medium-sized financial institutions to invest in this technology. At one point, for instance, there were some 200 shared ATM networks in the US and 80 shared networks in Japan.

They also became more popular once banks digitised their records, allowing the machines to perform a host of other tasks, such as bank transfers, balance requests and bill payments. Over the last five decades, a huge number of people have made the shift away from the cash economy and into the banking system. Consequently, ATMs became a key way of avoiding congestion at branches.

ATM design began to accommodate people with visual and mobility disabilities, too. And in recent decades, many countries have allowed non-bank companies, known as Independent ATM Deployers (IAD) to operate machines. The IAD were key to populating non-bank locations such as corner shops, petrol stations and casinos.

Indeed, while a large bank in the UK might own 4,000 devices and one in the US as many as 12,000, Cardtronics, the largest IAD, manages a fleet of 230,000 ATMs in 11 countries.


Bank to the future

The ATM has remained a relevant and convenient self-service channel for the last half century – and its history is one of invention and re-invention, evolution rather than revolution.

Self-service banking and ATMs continue to evolve. Instead of PIN authentication, some ATMS now use “tap and go” contactless payment technology using bank cards and mobile phones. Meanwhile, ATMs in Poland and Japan have used biometric recognition, which can identify a customer’s iris, fingerprint or voice, for some time, while banks in other countries are considering them.

So it’s a good time to consider what the history of cash dispensers can teach us. The ATM was not the result of a eureka moment of a single middle-aged man in a bath or garage, but from active collaboration between various groups of bankers and engineers to solve the significant challenges of a changing world. It took two decades for the ATM to mature and gain widespread, worldwide acceptance, but today there are 3.5m ATMs with another 500,000 expected by 2020.

Research I am currently undertaking suggests that ATMs may have reached saturation point in some Western countries. However, research by the ATM Industry Association suggests there is strong demand for them in China, India and the Middle East. In fact, while in the West people tend to use them for three self-service functions (cash withdrawal, balance enquiries, and purchasing mobile phone airtime), Chinese customers consumers regularly use them for as many as 100 different tasks.

Taken for granted?

Interestingly, people in most urban areas around the world tend to interact with the same five ATMs. But they shouldn’t be taken for granted. In many countries in Africa, Asia and South America, they offer services to millions of people otherwise excluded from the banking sector.

In most developed counties, meanwhile, the retail branch and the ATM are the only two channels over which financial institutions have 100 per cent control. This is important when you need to verify the authenticity of your customer. Banks do not control the make and model of their customers’ smart phones, tablets or personal computers, which are vulnerable to hacking and fraud. While ATMs are targeted by thieves, mass cybernetic attacks on them have yet to materialise.

The ConversationI am often asked whether the advent of a cashless, digital economy heralds the end of the ATM. My response is that while the world might do away with cash and call ATMs something else, the revolution of automated self-service banking that began 50 years ago is here to stay.

Bernardo Batiz-Lazo is professor of business history and bank management at Bangor University.

This article was originally published on The Conversation. Read the original article.