Octopus Investments is set to cut around a fifth of its workforce as it accelerates the adoption of artificial intelligence, in a move that reflects the rapid transformation underway across the asset management industry.
The City-based firm, which manages close to £15 billion in assets, is understood to be placing around 130 roles at risk of redundancy, primarily in back-office functions. With just over 600 employees, the restructuring represents a significant shift in how the business operates, as it seeks to streamline processes and modernise its infrastructure.
The cuts form part of a broader strategy to invest more heavily in technology, particularly AI, which is increasingly being used to automate routine tasks, improve efficiency and reduce operational costs across financial services.
The move underscores how quickly AI is reshaping the financial sector, particularly in areas such as administration, compliance and reporting, where repetitive processes are well suited to automation.
Asset managers have been among the fastest adopters of the technology, using AI tools to handle data processing, client onboarding and portfolio analytics. As a result, roles that were once labour-intensive are being reduced or redefined.
Octopus Investments said the decision was necessary to ensure the business remains competitive in a rapidly changing environment.
“We’ve made the difficult but necessary decision to ensure we are a simpler business that can respond to the pace of change,” a spokesperson said, adding that affected employees would be supported in finding new roles both within the wider group and externally.
The restructuring is not an isolated case. Across the City and globally, financial institutions are reassessing their workforce structures as AI capabilities expand.
HSBC, for example, is reportedly considering up to 20,000 job cuts over the coming years, partly driven by the efficiency gains offered by AI.
The shift reflects a broader recalibration of the industry, where firms are balancing cost pressures with the need to invest in new technologies that can enhance performance and client service.
Despite the job cuts, Octopus Investments remains financially robust. The firm reported a 10.3 per cent increase in net profit to £76.7 million in 2024, with revenues rising to £225.7 million.
It is one of the most profitable divisions within the wider Octopus Group, which also includes businesses such as Octopus Energy and Octopus Money.
The decision to reduce headcount is therefore not driven by financial distress, but by a strategic effort to adapt to technological change and maintain long-term competitiveness.
The firm has faced some criticism in recent years over the fees charged on certain investment products.
Its flagship venture capital trust, Octopus Titan VCT, agreed to reduce management fees by 17 per cent last year, while the company has also earned substantial fees from managing private investment vehicles, even in periods where those funds reported losses.
These issues have added to the pressure on the business to demonstrate efficiency and value for investors, a factor that may also be influencing its push towards automation.
For employees, the restructuring highlights the growing impact of AI on white-collar roles, particularly in financial services.
While front-office and client-facing positions are less immediately affected, back-office functions are increasingly being automated, reducing the need for large operational teams.
At the same time, new roles are emerging in areas such as data science, AI development and digital strategy, suggesting a shift in the types of skills required across the industry.
As AI continues to evolve, asset managers are likely to face further pressure to adapt their business models, balancing efficiency gains with the need to retain expertise and maintain client trust.
For Octopus Investments, the current restructuring represents a significant step in that transition, one that reflects both the opportunities and challenges posed by technological change.
Across the City, similar moves are expected to follow, as firms seek to position themselves for a future where automation plays an increasingly central role in financial decision-making and operations.
Amy Ingham
Amy is a newly qualified journalist specialising in business journalism at Business Matters with responsibility for news content for what is now the UK’s largest print and online source of current business news.