This could refer to a work situation, but now there are laws against flirting in the work place as employers are afraid of being sued for sexual harassment.

It seems this sentence is spoken by some guy who meets a girl after he hasn't seen her for a while. "flirtatious banter" describes when 2 people who are very close kinda make fun of, but at the same time are flirting with each other. If you've ever been in love you'll know what this is ;-) So in short, the feeling he has with the girl now is not the same as it used to be, they're not so close anymore.

Flirt means to "to attract someone playfully or with allure". Flirtatious is the adjective form and means "of flirting". Banter means "little teasing remarks". I think the phrase meant they did not exchange or say flirting remarks to each other which they used to do and enjoyed before.