You might be knowing that there is a policy on our site to add citations in answers. There is a list of valid references which are also added in the faq. When there are no valid sources in an answer, Moderators tend to put a post notice which means a valid reference is missing in the answer. Our site uses Citation needed notice than other notices. The text used in the notice is following:
Some of the information contained in this post requires additional references. Please edit to add citations to reliable sources that support the assertions made here. Unsourced material may be disputed or deleted.
This notice is used more frequently on our site. Moderators put it either by their discretion or when they see a flag requesting it.
This is where I see a problem. There are more than 419 answers with some sort of notice. Out of which major share is of citation needed banner.
Users get notified when a notice is put on their answer. If a comment is also left along with a notice, that would be fine. But in many cases, there is just a banner without explaining what is wrong in the answer, which part needs improving the answer and why a banner is put in the answer. Not a comment by the flagger or by a moderator.
If you say the notice says it all. See how it can be interpreted.
Some of the information contained in this post requires additional references. Please edit to add citations to reliable sources that support the assertions made here. Unsourced material may be disputed or deleted.
Which part needs references What is some? How much is some? Which part is fine and which paragraph needs more references? I have come across many answers which provide some kind of valid source as listed in the above linked faq but there is still a banner (One of which is my answer. I had to ping a moderator in chat to know what is wrong in the answer and improved it later).
When a user sees a banner, their focus changes to the first and last sentences which say more references are needed and saying "Unsourced information may be disputed or deleted" as it is a moderator who added. It is natural that a user thinks their answer might get deleted. That is not a good experience when there is no clarity.
New user's perspective. Many new users visit the site and write answers with something what they know. Some may write good answers along with references whereas some give information directly. Some do not even know how to write answers in Markdown formatting. (Forget about new users, users with some reputation had problems in using it. I once noticed that a post notice was added in First Post reviews. When a notice is slapped on their answer, it is not helpful to them because they do not what is that and why it is put. Many do not even take the tour of the site or visit help center guidelines at the time of answering. So, expecting them to improve their answer just because a banner is placed is expecting next to impossible. We can't expect a new user to know site functionality on day one. Many have zero idea about the policies we follow here.
Stack Exchange is now emphasizing on improvement of new user's experience network wide. Using more and more automated comments or automated mechanism without much of manual intervention will not help in improving the experience and in turn the improvement of the content.
If the flagger and a moderator knows where the answer needs improvement, that is not enough. The user who posted the answer. Other users in the community should also know which part needs improvement so that they can help with improvement. As far as I know, there is no telepathy between the OP and moderators so that the users can know the thoughts of moderator or between the user who flagged for citation notice. A comment would be help the user.
These automated banners are never a substitute for manual comments. A comment is always given higher preference over these things. The faq on Meta Stack Exchange says following (bold emphasis mine):
Notifications are not intended to replace the normal channels, but to annotate exceptional situations. Therefore, it's unlikely that a post will actually need an annotation. Comments, votes, edits, and new answers may be better choices. However, if you do think a post needs to be annotated by a moderator, feel free to raise a flag.
That is why a moderator posts a comment manually to let the user know their answer is deleted and why the answer is deleted. So, that the user will know the reason why it is deleted. It is better we approach a similar method for citation also.
I have heard from a moderator and a user that it is like a note of caution to the reader who is reading the answer. But the text reads a different definition from what is said. It says unsourced information will be deleted. The reader who might not know the mechanism will be mislead in this matter. I personally do not see the same interest from the in removing the citation banner after a post is updated with proper sources. If a banner is still in place after notifying a moderator or improving the answer, the readers will be mislead.
If we are just adding a notice for the sake of adding and not letting the OP why and where the answer is lacking proper sources, it is highly unlikely the answer will be improved. If you are a user, your helpful flag count may increase but the answer might remain the same. Every step we take should be for improvement only and not for name sake. The OP should know and he may back up with sources to support his claims. If a moderator or another user adds it based on their assumptions, that might not match the intent of the OP. We might add a different faith, philosophical text or different translation other than the OP follows. Editing information which conflicts with OP's intent is not OK. It's like putting our words in OP's mouth.
TL;DR : If you are flagging an answer for moderator intervention for a post notice, take some more time to let the user know that their answer needs some more references for improvement to match the site's standards. It is not enough the flagger and moderator knows which part needs more improvement. The user who wrote the answer should also know so that the answer can be improved.