I wonder how much this regulation has to do with the EU commission being terrified after Brexit and wanting to create more financial linkage between member states. I feel this regulation may backfire in that regard. What will an institution like Deutsche do if/when they fuck up implementing this ? What will the government do in response ?
Especially given the state of European banks (TLDR: who are going to need a bailout soonish).
Creating "financial linkage" is an obvious direct result of the EU's primary mission.
Regarding the risks you (and other in this thread) mention: This really isn't something that has any impact on the system's exposure to risk. It's just a technical process for moving information and (limited amounts of) money between banks and financial service companies. If you're worried about a meltdown of the banking system, you have to look at the regulations on capital requirements, accounting standards, asset valuations etc.
Especially given the state of European banks (TLDR: who are going to need a bailout soonish).