Here's my thoughts on Geno situation relative to Banjo: it helps, but it doesn't guaranteed anything.
On the one hand, Banjo is the latest in a general trend that has impacted much of Ultimate's roster: getting in heavily requested characters. Every vet returning, Ridley, Castlevania's inclusion, Chrom, Dark Samus, King K. Rool, Dragon Quest's inclusion, and Banjo and Kazooie all happened specifically to satisfy fan requests. While Geno's popularity has fluctuated throughout the years, he's one of the few characters Sakurai has openly acknowledged as very popular and requested.
Second, Banjo shows that Nintendo and Sakurai are willing to fight for obscure, fan-favourite options when working with third parties that could bring bigger names. This was one of the most frequent arguments in the now dead Banjo-Steve argument, Steve's inclusion benefits both Nintendo and Microsoft far more than Banjo from a business perspective. For Nintendo, the protagonist of the best-selling game of all time would shift far more fighter's passes than a mascot who hit his peak 19 years ago and has shifted in and out of life ever since. For Microsoft, giving the spotlight to their evergreen cash cow that can be purchased and played on every platform under the sun makes far more sense than trying to sell a budget rom compilation from 2015.
However, in spite of this, Banjo ultimately won out over Steve. The fan-favourite beat out a more lucrative option from a business perspective.
Here's the rub though, Square is not Microsoft. Ever since it became clear the Xbox One would ultimately underperform, Microsoft has been breaking a lot of the standard practices of console manufactures. In 2013, the idea of Microsoft deemphasizing the Xbox brand by focusing on alternative delivery methods and working with direct competitors was almost unthinkable. As such, choosing to work with the relatively risky Banjo over the more conventional Steve isn't that out-there, as Microsoft takes these sort of leaps often. Square, by comparison, is much more by-the-books than Microsoft. They're far more protective of their IPs, adopt new business strategies far slower, and will follow what's proven first and foremost.
However, I still don't think Square opting to use Geno is totally out of the question. Square's two must-have IPs are now in Smash: Final Fantasy and Dragon Quest. It makes sense those two would be the first to join the battle, seeing how they single-handled have made Square-Enix into what it is today. Square evades bankruptcy twice by leveraging Final Fantasy, while few would really care about Enix if they weren't the Dragon Quest guys. What happens next for Square and Smash is really up in the air. They could promote one of their smaller franchises like TWEWY or Chrono Trigger, ride off the Nier hypetrain with 2B (although I personally doubt this is the case given that Sakurai and Yoko Taro only met recently), or they could even try to work with the Mouse for Sora. Within these options, bringing back Geno and the rest of Super Mario RPG's cast is a realistic possibility. After all, they were fine with using Geno for one of their two costumes in Smash for Wii U/3DS, when putting in a costume for someone like Slime, Lara Croft, or Sephiroth could also be done.
TL;DR: Banjo is another example of Ultimate's theme of adding highly requested characters. Likewise, he sets the precedent for a fan-favourite beating a better business choice. This benefits Geno. However, Square is much more conventional than Microsoft, meaning they might be scared off by the risk this decision presents. However, Square already has their two big players in, so going outside the box for choice #3 isn't too out there.