Determinants of Customers' Digital Banking Utilization a Pathway to Cash-Lite Economy: Evidence from Addis Ababa

Ethiopia's digital economy is still developing, with only a limited number of private sector companies offering online services and a few government-sponsored initiatives aimed at digitalization. This study explores the factors influencing customers' utilization of digital banking as a pathway to a cash-lite economy, focusing on evidence from Addis Ababa. The research is framed within the Unified Theory of Acceptance and Use of Technology (UTAUT2) and employs a quantitative approach using a descriptive and explanatory research design. We collected primary data from customers of commercial banks in Addis Ababa. Accordingly, 428 questionnaires were distributed to customers of commercial banks in Addis Ababa using the convenience sampling method, and 405 responses were properly filled out with a response rate of 94.62%. The overall reliability, measured by Cronbach's alpha, was found to be 0.913. The findings indicate that performance expectancy, facilitating conditions, hedonic motivation, and habit significantly and positively influence digital banking utilization, supporting the hypothesis. In contrast, effort expectancy, social influence, and price value were found to be insignificant factors. The study concludes that increased digital banking utilization can facilitate progress toward a cash-lite economy. To encourage customers to adopt digital banking services, commercial banks should develop strategies to raise awareness and create incentive mechanisms. Additionally, the national bank should establish a legal framework to monitor and evaluate digital banking transactions within commercial banks, promoting the transition to a cash-lite economy.