I can see quite an advantage to Monzo acting as a liquidity intermediary between Ratesetter (who are good people to talk to) and Monzo subscribers.
I imagine an “invest my excess balance” option. If clicked it asks how much, say in units of 100 pounds. Those funds are then “greyed out” and can’t be spent via debit card.
Monzo put 75% of all these reserved amounts into Ratesetter, and get say, a 3% return.
The other 25% is kept as a float, so that there is cash available to allow users to change their minds.
Monzo keeps 1% of the return as a fee.
The users get around 1.5% interest, which is the Ratesetter return, less Monzo fee, less the fact only 75% is invested so as to keep a float.
This doesn’t sound much, but it’s way more than regular accounts.
Over time Monzo would adjust the 75/25 split depending on how much float turned out to be needed.
What I haven’t answered is where the risk sits. Monzo couldn’t take on the risk directly, but perhaps it could be insured.