That actually has two reasons.
The first one is that we wished to increase the difficulty of the game, which was done by encouraging the player to use spies in order to know enemy movements. Therefore, we removed the banners. This increases the immersion a lot, I for one really feel like a general trying to get information with which to decide how to act.
The second reason is aesthetic pleasingness. The new settlement models look a lot better without banners. Also, turning them off allowed us to introduce new stratmap models for armies and navies, which in my opinion look excellent.
Seeing these improvements, we decided to turn off the banners and implement our own system. Just play around a bit, you'll get used to it quite soon.
