Determinants of Digital Banking Utilization in Addis Ababa: A Structural Equation Modeling Approach

The expansion of internet connectivity and mobile technologies has transformed financial services worldwide, positioning digital banking as a key platform for transactions. In Ethiopia, adoption has accelerated through regulatory reforms and national strategies such as Digital Ethiopia 2025 and the National Financial Inclusion Strategy. Despite these developments, empirical studies remain limited, particularly in urban contexts where usage is rapidly increasing. This study applies the Unified Theory of Acceptance and Use of Technology 2 (UTAUT2) to examine factors influencing digital banking utilization in Addis Ababa. Using survey data from 405 respondents and Partial Least Squares Structural Equation Modeling (PLS-SEM), the analysis shows that facilitating conditions and price value were the strongest predictors of adoption, followed by performance expectancy and social influence, while effort expectancy was not significant. These findings underscored the importance of infrastructure readiness, affordability, and normative influences in shaping digital banking users. The study contributes to technology adoption literature by contextualizing UTAUT2 within Ethiopia’s financial sector and offers practical insights for policymakers, banks, and technology providers seeking to advance digital financial inclusion.