Banners are fairly common in the Old Testament, being mentioned six times: Psalm 20:5; 60:4; Song of Solomon 2:4; 6:4, 10; Isaiah 13:2. Often they were used to keep army companies together. Each company would follow its own banner into battle. The Song of Solomon refers to the loved one being "terrible as an army with banners" (Song of Solomon 6:4, 10).
On the other hand, in Song of Solomon 2:4, the Shunnamite says of Solomon, "his banner over me was love." Very likely, the banners were used for decorations even in the homes of the wealthy. The two occurrences of "banner" in the book of Psalms is especially interesting:
Psalm 20:5 We will rejoice in thy salvation, and in the name of our God we will set up our banners: the LORD fulfil all thy petitions.
Psalm 60:4 Thou hast given a banner to them that fear thee, that it may be displayed because of the truth. Selah.
God's people set up banners in the name of their God in a time of rejoicing. From this we learn that banners were probably used for celebrations and that they would often identify those who set it up with a certain person or group. We see that today in sports and political battles. Psalm 60:4 has special spiritual significance. God gives a banner to those that fear Him so that it may be displayed because of the truth. Therefore, a banner was not only used to rally the troops; it was also used to declare allegiance to a certain person, group, or cause. We are to declare our allegiance to God and to His word. We might even say that His word is our banner.
For a full study, you would also need to look up the twenty-two Bible references to "standard" or "standards" and the nine references to "ensign" or ensigns." They are synonyms to the word banner. However, these words are also found only in the Old Testament. There is no New Testament reference to a banner, standard, or ensign.
Although I am familiar with churches putting up banners with a Bible verse or other statement or announcement, I am not familiar with the decoration of church interiors with banners of different colors as you mention. I have seen colorful banners at the entrance of homes for the purpose of decoration. Although I can see nothing wrong with a certain amount of decoration, we must understand that there is no scriptural teaching that would lead us to put up banners of certain colors with particular messages. Though it is not prohibited in the Bible, it is certainly a manmade practice.
To me, it sounds like one of the religious fads that continually run through churches today. The idea is that since everyone else is doing it, we need to do it too. Giving the colors "prophetic" significance may be a justification for doing something new that is not in the Bible. This may give meaning to something that may look silly without the justification.
To me, the danger is not in the banners themselves. They are harmless in and of themselves. However, why is the church doing this? Who are they following? What else might they be led into by those who influenced them to use the banners? If they will follow man instead of God, just how far will they go? The next "fad" may be much more dangerous than this one. I cannot answer these questions for anyone else. I just think they need to be asked.