Banquo is a "foil", a character who is placed in a work in order to contrast thoughts and actions with another character. Banquo is the voice of reason and caution to Macbeth's wild ambition. Without Banquo's reasoned relflection upon hearing the original prophecies, and without his character giving us clues as to Macbeth's reactions, the reader would perhaps not see as clearly how different interpretations can be made of the same source, and how some interpretations are dangerous, and others benign.
Moderately. He's useful—he shows that one can receive a prophecy and not go insane with ambition, he shows comparatively virtuous action, and he is another target for Macbeth's wild action later in the play. However, all of these functions could be completed in other ways.