Big banks are largely blaming their earnings woes on subprime mortgages and leveraged buyout loans gone bad. True enough. But it also appears that their basic consumer banking business is deteriorating.

Take Citigroup, the biggest U.S. bank. About one-half of its write-down largely stems from subprime-related losses. Okay. But the other half comes from its consumer banking business: Home-equity loans, mortgages, and credit cards. Credit crunch or no credit crunch, subprime or no subprime, Citi’s basic consumer banking business isn’t doing so well these days.

That leads me to this press release from a national California Credit Union service organization, FSCC. According to a press release:

“As of today [October 18], millions of credit union members have access to check depositing kiosks at 2,000 7-Eleven stores nationwide. Financial Services Centers Cooperative, Inc (FSCC), the nation’s leading credit union shared branch network, announced today that credit union services will be delivered through approximately 2,000 advanced financial self-service kiosks, which are owned and operated by Cardtronics, Inc., and located in 7-Eleven store locations across the country.”

And these are no-fee ATM machines.

I think this services like this bode ill for banks, and I expect many more similar initiatives. Banks have raised their fee income–from ATM charges to bounced checks–too high. The competition now has plenty of room to undercut the banks, putting additional pressure on their bank earnings.