I'd be curious to know how much of the "overage" is from businesses that would be fine with narrow banking at the Fed.

The obvious downside is that you still need regular banks and financial institutions for loans, but for large operating accounts for many companies you just want something you can spend and won't disappear. And presumably this is why the Fed doesn't permit narrow banking: major deposits would dry up, loan rates would have to be much higher, and so on.