Banana Guard is a problem for a lot of reasons, more than just being a lazy joke addition:
First, he's yet another example of not acting like the character in canon
Second, his moveset is so dreadfully boring. Whether or not you like the moveset design philosophy in Multiversus, one thing you can say about most characters there is that their movesets are definitely unique. Of course, Shaggy, Nubia, and Reindog also have this problem.
Third, their out-of-touch "how do you do fellow kids" attempts to make him a mascot of the game. Frequently getting skins, being heavily featured in marketing, getting a bunch of cosmetics referencing memes from over a decade ago... and the dreadfully forced line "You guys like me, right?" I have never seen a company sniff their own fart fumes like PFG did with Banana Guard's addition.
Fourth, as a joke pick he's not even particularly funny. In the universe of Adventure Time, he's basically John Call of Duty - a generic soldier. It's the equivalent of putting a Goomba on the roster, except a Goomba would actually be funny because Goombas don't really do anything in their own series. Wii Fit Trainer is a funny joke character. Hugh Neutron and Grandma Gertie are funny joke characters. Dan Hibiki is funny. Gon in Tekken 3? Hilarious! Banana Guard isn't.