The 37 million American adults who are underbanked have a tough time when it comes to basic financial activities such as paying bills.

His latest research on this segment forced Mark Schwanhausser, director of multichannel financial services at Javelin Strategy & Research, to reflect on the lives of the banking have-nots. "It paints a picture of how difficult it must be to be underbanked. It's hard to understand what life would be like without a basic banking account. It's like oxygen. A prepaid card may be a different flow of oxygen. But you have to have some kind of financial building block in which to start building access to credit, one of the aspects of building a life."

People who are underbanked tend to carry wads of cash in their pockets and have to physically walk into a utility office to pay bills, into a store to pay off retail cards, or into a Verizon or AT&T storefront to pay off a cell phone bill in cash. "That seems like a lot of wasted time and effort for what could be replaced by a digital payment," Schwanhausser muses.

Some companies are striving to meet this need, such as American Express with its Bluebird account. The Bluebird provides online and mobile bill payments for free as well as mobile check deposit, and lets customers top up their cards at Walmart. "This is the kind of feature set that adds up to benefits to customers," Schwanhausser says. "It's a viable alternative if it's priced appropriately. It lets them buy things online and book hotels and rental cars."

But banks don't have to sit on the sidelines when it comes to the underbanked, Schwanhausser says. "It's a challenging segment, because some have economic or cultural obstacles to banking. But there's an opportunity to service this community through banks," he says. "We already see examples of banks like Regions, Key Bank and Wells Fargo that have let non-customers come into a branch and receive services and transactions at an affordable price, in a way that's good for the customer and the bank."

Regions offers Now banking services for customers and non-customers that include check cashing at bank branches, reloadable prepaid cards, money transfers, and walk-in bill payment.

KeyBank has KeyBank Plus Centers in six states at which people who do not have KeyBank accounts can cash payroll, tax refund, or government checks for a 1.5% fee.

Wells Fargo offers international money transfer services that compete with Western Union and MoneyGram. It also offers a Visa secured card for which the customer deposits $300 to $10,000 into a "collateral account," and then can charge up to that amount on the card. The annual percentage rate is around 18.99%.

What these banks are after is "the opportunity to bring a customer in early and train them in the online and mobile channels so that you're cost efficient, working paper out of the system," Schwanhausser says. "Who wants to let a potential market slip away if there's a way to serve it profitably?"

Some banks, such as BB&T and U.S. Bank, have begun offering prepaid cards to this market as an alternative to a checking account.

However, even when a customer has a prepaid account, the bank still needs to figure out how to get that person to use the account and how to become more broadly useful to that customer, Schwanhausser says.

A combination of online banking, mobile banking, PFM and financial alerts could give banking newcomers the sense of control and oversight they need, Schwanhausser suggests.

Green Dot's GoBank, a debit card and mobile banking app, has the right ingredients to appeal to 24-35-year-olds, the older half of Generation Y, Schwanhausser says -- oversight, alerts, online and mobile access. "But what they don't have is something that those consumers need, which is depth of banking products," he says. "We see older Gen Ys settling down, picking a bank, starting to pay bills and take out car loans and mortgages. If a GoBank doesn't have that repertoire, then that consumer has to look elsewhere."

Schwanhausser divides the underbanked into two broad classes. There are those that haven't decided they need a bank account, for instance a college student whose parents send him prepaid cards. Such customers can simply go to a bank and set up an account when they're ready.

The other category, the one that concerns consumer advocates more, has an obstacle in the way of getting a bank account. It might be unemployment, underemployment, or poor credit history. Some are immigrants who don't trust banks. "But they still need financial products," Schwanhausser says. "How do you provide this to people who are higher risk and need to move money around? I'd rather see consumers coming to a place that doesn't' have bars in the windows, that is a lower risk, and not working people into a cycle of debt, trying to induce them to make financial missteps."

Some banks have been criticized for high-rate small-dollar loans, similar to payday lenders. A recent New York Times article suggested that some large banks work with payday lenders by letting customers make automatic deductions from their checking accounts for the loan payments, yet neglecting to stop payments when customers ask them to, because they want to accrue overdraft fees.

"It seems Machiavellian," says Schwanhausser, who doubts there's true complicity there.

The key thing for banks to do, he believes, is to think about features that will give the underbanked consumer a sense of control over his finances. "When you're designing a prepaid card, you've got to think about the tools to check balances, top up, set up bill reminders, make bill payments, and tie in fraud alerts," he says. The next level of PFM is to extend the relationship beyond banking transactions, to mobile banking features like comparison shopping and reminders when a retailer has dropped a price after the customer bought a product, he says.