There is already a function of [Merge duplicate records] for accounts, contacts, or leads entity as confirmed on the following MSDN.
https://docs.microsoft.com/en-us/dynamics365/customerengagement/on-premises/basics/merge-duplicate-records-accounts-contacts-leads

However it's not available for other entities.
If user can use [Merge duplicate records] for custom entities as default function, it will make the process of manage the duplicate records on their environment much easier.