The Real Cost of Failing a SOC 2 Audit: What Fintech Companies Lose Beyond the Certification

Compliance

Feb 16, 2026

x min read

Table of content

Failing a SOC 2 audit can cost fintech companies far more than just certification. It impacts revenue, trust, and operations. Here's what you need to know:

How to Avoid Failure:

Investing in compliance readiness saves money, protects trust, and keeps your business competitive. SOC 2 isn’t just a checkbox - it’s a safeguard for long-term success.

The True Cost of SOC 2 Audit Failure for Fintech Companies

The Direct Financial and Operational Costs of Audit Failure

Fines, Remediation Costs, and Legal Liabilities

Failing a SOC 2 audit doesn’t just hurt your compliance status - it starts a chain reaction of financial burdens. First, you’ve already sunk money into the initial audit, which ends up producing a report you can’t use. Then come the remediation costs, which can range from $5,000 to $25,000, plus the price of a re-audit. On top of that, emergency consulting fees can add up fast, costing between $200 and $500 per hour. And here’s the kicker: running a non-compliant operation costs 2.71 times more than maintaining a compliance program that meets standards.

A failed audit also raises red flags for regulators. It often points to deeper compliance problems, potentially putting you under scrutiny from laws like GDPR, HIPAA, or PCI DSS. Take Coinbase, for instance. In January 2023, the company agreed to a $100 million settlement after the New York Department of Financial Services found massive compliance failures, including more than 100,000 unreviewed transaction alerts. The settlement included $50 million in penalties and another $50 million earmarked for compliance improvements. Similarly, Monzo Bank faced a £21 million fine in July 2024 after the UK’s Financial Conduct Authority discovered that its internal testing couldn’t keep up with its growth. This allowed accounts to be created with blatantly fake addresses, including "Buckingham Palace".

"Our research confirms what forward-thinking security leaders already know – reactive compliance approaches are exponentially more expensive than proactive programs."

– Shrav Mehta, CEO,

If non-compliance leads to a data breach, the costs balloon even further. Globally, these breaches add an average of $174,000 to the bill. For U.S.-based companies, the stakes are even higher, with the average data breach costing $10.22 million. SoFi learned this the hard way in May 2024, when flaws in their identification system allowed fraudsters to open 800 fake accounts, stealing $2.5 million. The fallout included a $1.1 million fine from FINRA and the eventual shutdown of their SoFi Money unit.

But the financial hits are only part of the story - operational disruptions compound the damage.

Operational Delays and Resource Drain

A failed audit doesn’t just drain your wallet; it derails your day-to-day operations. Teams that should be focused on innovation and growth are instead stuck in firefighting mode. Engineering resources are redirected to patch compliance gaps, DevOps teams are pulled into fixing access control issues, and leadership spends months managing remediation instead of driving the business forward. Typically, compliance efforts demand 20–40% of a project manager’s time and 10–20% of IT resources over 6–12 months. When an audit fails, these numbers skyrocket as teams scramble to address the findings.

Robinhood Crypto’s experience in August 2022 paints a clear picture of this operational chaos. The NYDFS fined the company $30 million after discovering its manual reporting system couldn’t manage an average of 106,000 daily transactions. This backlog forced the company to divert resources away from product development, while regulators required oversight from independent consultants. Product launches stalled, market expansion plans were delayed, and critical initiatives sat in limbo for 6–9 months as the company worked to clean up its compliance issues.

And rushing to fix problems often creates new ones. During Coinbase’s efforts to clear its backlog of alerts, one contractor’s work had a staggering 96% failure rate. This means companies end up paying twice - once for the rushed, flawed fixes and again for proper solutions. Meanwhile, competitors with clean SOC 2 reports are busy locking in enterprise deals that remain out of reach for those stuck in remediation mode.

sbb-itb-ec1727d

Reputation Damage and Loss of Customer Trust

Customer Departures and Lost Deals

Failing a SOC 2 audit can seriously damage customer trust and directly impact revenue. Consider this: 29% of organizations have lost deals due to lacking proper compliance. In industries like fintech, where SOC 2 compliance is often a baseline requirement for enterprise clients, an audit failure can take you out of the running before discussions even begin. Procurement teams frequently use these reports as a first-line filter.

The numbers paint a stark picture. 75% of consumers won’t buy from companies they don’t trust, and 80% are willing to leave if their data is mishandled. A real-world example of this is Okta’s major security breach in 2022, which stemmed from compliance lapses. The incident affected thousands of customers, damaging both its market position and trustworthiness. Adding to this, 50% of businesses end vendor relationships over security concerns.

"In 2024, nothing kills a business faster than a reputation for losing customer data."

– Christian Khoury, Founder,

These immediate consequences often snowball, leading to deeper, long-term damage to your brand’s reputation.

Long-Term Brand and Market Credibility Damage

The fallout from a failed audit doesn’t stop at lost deals. It can erode your brand’s credibility and shake the confidence of investors and stakeholders. Just as operational disruptions can multiply costs, reputational issues can have a lasting impact on your business.

Here’s the reality: 62% of organizations report that third-party data breaches or compliance failures harm their brand reputation. For clients, a compliance failure signals a weak link in their partner network. This perception can spread quickly, especially in tightly connected industries like financial services.

Investors and board members also take notice. A failed audit often signals operational shortcomings, which can hurt funding opportunities and lower valuations. Meanwhile, competitors with clean SOC 2 reports are busy winning contracts and growing their market share. Rebuilding trust after a public compliance failure is a long, expensive process that can take years. Customer acquisition costs can skyrocket as you work to repair your reputation. For instance, one startup managed to secure $500,000 in contracts immediately after achieving compliance, following a period of being sidelined due to non-compliance.

"Users of the report who see a qualified opinion will start to question the service organization's compliance efforts and how they address risk."

– Dave Zuk, Director of SOC and Workforce Optimization,

How to Prevent SOC 2 Audit Failure

Failing a SOC 2 audit can be costly, both financially and reputationally. The good news? Most failures can be avoided by embedding compliance into your daily operations instead of resorting to last-minute fixes. Here's how fintech companies can stay prepared and steer clear of audit setbacks.

Make Compliance Part of Daily Operations

Compliance isn’t a one-and-done task - it’s a continuous effort that needs to be part of your company’s DNA. As Troy Fine, Senior Manager at Schneider Downs, explains:

"The difference between an audit that is going to go quickly and an audit that's going to be a train wreck and a battle has to do with leadership support."

Without leadership backing, allocating resources for compliance controls often gets delayed. To avoid this, assign clear ownership for each control area. When stakeholders are accountable, exceptions are addressed rather than ignored, fostering a company-wide culture where security is everyone’s responsibility - not just the IT team’s.

Collaboration across departments is also crucial. Compliance touches many areas, including HR, Sales, and Engineering. For instance, HR can integrate compliance into onboarding by ensuring new hires complete security training and sign necessary documentation. Sales teams handle security questionnaires, while Engineering manages system configurations and access controls. And here's an eye-opener: about half of what a SOC 2 audit assesses has nothing to do with software security - it’s about risk management. A strong compliance program requires input from all corners of the organization.

These practices also set the stage for seamless automation, which can drastically reduce the workload, as explained next.

Use Compliance Automation and Expert Teams

Manual compliance work eats up time and resources. Preparing for an audit often means spending hundreds of hours gathering evidence through interviews, spreadsheets, and screenshots. Automation platforms can handle up to 90% of this heavy lifting, letting your team focus on core business activities like product development and sales.

For fintech companies, the numbers speak for themselves. Automation can shorten the SOC 2 certification process by 40%, reducing the timeline from 6.8 months to just 3.1 months. In fact, 78% of fintech companies now use automation for compliance, with an average certification time of 4.2 months.

However, most compliance platforms only track tasks - they don’t execute them. Partnering with expert teams that handle tasks like configuring access controls, collecting evidence, and addressing gaps can significantly cut both costs and timelines. This approach also helps reduce remediation expenses. Startups often underestimate compliance costs, budgeting around $35,000 but ending up spending closer to $84,000. On average, first-time SOC 2 certification costs fintech companies about $75,000, with expenses broken down as follows:

Cost Category
Percentage of Total Cost

Consulting/Advisory
35%

Audit Fees
25%

Compliance Platforms
20%

Security Tools
15%

When choosing partners, ensure your auditing firm understands your tech stack and is open to leveraging automation. Engaging auditors early for a gap assessment can align timelines and streamline the process.

Monitor Controls and Fix Issues Before Audits

Discovering control failures during an audit can lead to delays. SOC 2 Type 2 audits evaluate controls over a 3–12 month period, so continuous monitoring is essential - not just a last-minute check.

Modern compliance platforms offer automated hourly checks to detect control drift or failures in real time, allowing teams to fix issues before auditors flag them. This proactive approach is a game-changer: 97% of organizations using compliance automation report spending less time on compliance tasks, and 76% reduce their workload by at least 50%.

Here’s a suggested testing schedule to stay ahead:

Review Activity
Frequency
Focus Area

Hourly/Continuous
Identify control drift or failures in real time

Quarterly
Ensure only authorized users have access

Quarterly
Find and address technical weaknesses

Annually
Evaluate new and emerging threats

Annually
Test containment and recovery plans

Perform a gap analysis 12 to 18 months before your SOC 2 Type 2 report is due. This gives you enough time to address issues without rushing. In the final 60 days of your audit period, increase communication with your auditors to ensure alignment and quickly resolve any follow-up questions.

"SOC 2 gap assessments should at the very least be performed on an annual basis. It's ideal for organizations to continuously monitor their compliance posture to ensure that their SOC 2 controls are operating effectively."

– Ethan Heller, GRC Subject Matter Expert,

One often-overlooked but crucial practice is conducting quarterly access reviews. Regularly checking permissions for employees and third-party vendors helps prevent "access creep" and reduces risks from offboarded staff retaining unauthorized access. Alarmingly, 34% of companies fail their first readiness assessment due to access control gaps, such as shared credentials or missing multi-factor authentication.

Lastly, don’t assume silence from your auditor means everything is fine. Often, it means they’re waiting on something from you. Proactive communication can prevent last-minute delays in the final report.

Conclusion: Investing in Compliance Readiness vs. Paying for Failure

Non-compliance isn't just a financial burden - it’s a multiplier of costs. On average, it’s 2.71 times more expensive than managing compliance effectively. For fintech companies, where customer trust hinges on data integrity, the stakes go far beyond dollars. Lost business opportunities, customer attrition, costly remediation efforts, and the diversion of critical resources all paint a clear picture of how damaging audit failures can be.

Taking a proactive stance on compliance does more than avoid penalties - it builds trust and speeds up deal-making. Companies that view SOC 2 as an ongoing commitment, rather than a one-off task, often close deals faster, face fewer security concerns, and avoid the lengthy delays - up to 6–9 months - needed to fix compliance failures and undergo re-audits. Yet, many startups fall into the trap of underestimating compliance costs, with 73% facing a budget gap averaging 2.4 times their initial projections.

The choice is clear: invest in continuous readiness now or risk paying significantly more later. Tools like Cycore simplify the entire compliance process - from gathering evidence to implementing controls - freeing your team to focus on innovation and growth. This approach not only reduces operational headaches but also shields your company from the steep financial and reputational consequences of non-compliance.

At its core, compliance readiness is not just another expense - it’s a strategic move that protects revenue, supports growth, and fosters the trust enterprise customers demand. So, the real question is: Can you afford to overlook compliance?

FAQs

What are the most common reasons fintech companies fail a SOC 2 audit?

Fintech companies frequently stumble during SOC 2 audits because of access control problems. These include delays in removing access for former employees, lack of automated systems to handle deprovisioning, and granting permissions that go beyond what's necessary. Beyond access control, other pitfalls include incomplete documentation, weak security measures, poor risk management practices, and a lack of employee training on security protocols. Tackling these issues head-on is essential to maintain compliance and steer clear of audit failures.

How long does it usually take to recover from a failed SOC 2 audit?

Recovering from a failed SOC 2 audit can take anywhere from several weeks to a few months. By sticking to a well-organized recovery plan, companies can often get back on track and become audit-ready in a matter of weeks, reducing downtime and quickly working toward compliance.

What should we do first to get SOC 2-ready without slowing down product development?

Start your journey toward SOC 2 compliance with a readiness assessment. This step helps pinpoint gaps in your controls, policies, and infrastructure early on, so you can address them before they become bigger issues. Key areas to focus on include access management and policy documentation, both of which are critical for compliance.

To make the process smoother and faster, leverage automation tools. These tools can simplify tasks like collecting evidence and documenting controls, cutting down the timeline from months to just weeks. By taking this approach, you can stay on track for compliance without slowing down your product development efforts.