Banding has been a common way to carry out long term research on animals, such as penguins. A ten year study of banded and non-banded King Penguins recently revealed that the banding may be harming the penguins. The study included penguins that were banded as well as penguins tracked with under the skin technology. The penguins that were banded had a lower survival rate after 10 years as well as produced fewer chicks than the non-banded King Penguins. It seems the penguins that are banded are affected by drag when they are swimming and end up aging physically faster than normal due to increased effort it takes to swim with the metal band on their flipper.
While it seems the bands affect the King Penguins, similar studies show that the bands are not as much an issue for other species, such as Magellenic penguins. Thus the study is not exactly a definitive that bands should not be used for studies. However, it does mean that some studies need to make sure they are not skewing the data to only climate change causes when the penguins in the studies are actually being slightly affected by the bands. Overall, though, it seems that using the under the skin tags are a much better choice and safer for the animals.
More on this here.