Certain conditions peculiar to South Africa contributed to high banking fees, the Banking Association of SA said in response to criticism in Wednesday's Budget.
Finance Minister Pravin Gordhan said in his Budget speech that fees for many products in the financial sector remained too high.
"We note the minister's comments on the financial sector," the association said in a statement.
"However, we must point out certain cost factors peculiar to South Africa that contribute to such costs. Examples are broadband costs, costs of protecting cash and significant compliance costs."
The association said increasing competition was leading to a more efficient sector with lower costs.
Gordhan's measures to encourage savings were welcomed.
"We welcome the initiatives towards tax-exempt savings products and commit the financial sector to working with government to give effect to this."
The association said the government should work with the private sector in developing the infrastructure to which R845 billion had been committed.
"We urge government to create the opportunities for private sector participation in these projects through sound PPPs [public private partnerships] and other mechanisms."
The Banking Association of SA is an industry body representing all registered banks in South Africa.