Cities that put people and public value at the centre of their artificial intelligence strategies are achieving stronger financial results, according to research by ThoughtLab. The study found that cities classified as AI leaders recorded an average return on investment of 96%, compared with 42% among other cities. They also recovered their investment in an average of 39 months, versus 49 months for their peers.

The report, Building a People-First, AI-Powered City, draws on responses from 525 senior officials across 215 cities, a review of 363 municipal AI plans and interviews with government, business and academic leaders. Its benchmarking identified 37 AI-leading cities, including Amsterdam, Barcelona, Dublin, Austin, Montreal and Seattle.

ThoughtLab CEO Lou Celi said the strongest-performing cities began with a human-centred approach, setting goals around public value before establishing the governance, data, technology and partnerships needed to deliver them. The study assessed cities across areas including governance, cybersecurity, data readiness, workforce development and partnerships.

Public acceptance remains a significant hurdle. The research found that 69% of cities considered trust and acceptance major obstacles to adopting AI, while 78% cited concerns about surveillance and privacy. In response, some municipalities have introduced safeguards. Seattle requires human review of Generative AI outputs before official use and prohibits social scoring. Amsterdam and Helsinki publish registers of algorithms used by their administrations.

The report also points to operational gains, including a 24% reduction in bus maintenance material costs reported by New York’s Metropolitan Transportation Authority after adopting AI-powered predictive maintenance.

However, many cities face challenges in expanding their AI programmes. Some 84% reported concerns about unexpected or long-term costs, 82% cited shortages of AI skills and talent, and 80% said they struggled to justify returns to stakeholders. Celi identified funding, workforce readiness and data as key barriers, while warning that some jobs could become obsolete without adequate retraining.

The research is due to be presented at the Smart City Expo World Congress in Barcelona, alongside a free AI playbook and benchmarking tool for municipalities to assess their AI maturity.

Sources: Cities Today.