Once the Dragon Banner is created you will receive another quest that requires you to get 100 Soldiers, a level 3 clan, and your own settlement. Whether you decide to side with Istiana or Arzagos, the path to forming your own Kingdom is the same. Once you have all 3 pieces of the Dragon Banner, you have a decision to make. This involves some basic quests where you hunt down some enemy strongholds, killing bandits and the like along the way. Once you have found the Nobles you will be given a few tasks to find the location of each piece of the Dragon Banner.
You must first locate the 10 Nobles as part of the main story quest.