NO, it does not make you look bad if you are on contract. reason being the climate for employment in banking is such that most operational headcounts in banking are contract. just because they can... operational positions are contract because they are dispensable.

I just went for an interview at a bank for a strategic position, I did not get it though it was a long and nice interview, interview made me feel like i sure get the job. Anyways.. in our conversations, the entire team is outsourced to Accenture.. which is very rare and in my opinion, my 1st time seeing this.
In my dept, this ops team is internal and the staff is perm. So this bank went to the extremes to outsource the entire dept as a service.

1 thing to note is not to dwell on the fact that you are on contract, cos HR or the hiring mgr will start to shortchange you, like offer you smaller increment just for the fact that they are doing you a favor by considering you as perm staff for their role. I would tell them to F off..!
contract or not, its a company HR strategy not your fault!