Abstract:
This study aimed to investigate the determinants of banking innovation on customer retention at the Commercial Bank of Ethiopia, Kolfe District. To achieve this, an explanatory and descriptive research design was employed, utilizing a quantitative approach. The researcher obtained a sample size of 400 respondents from a study population of 1,324,400 customers using Taro Yamane's formula. A multistage sampling technique was used to select a representative and manageable sample from the target population. Both primary and secondary data were collected, with primary data gathered through structured questionnaires utilizing the Likert scale. The questionnaires assessed six characteristics of banking innovation: security, ease of use, compatibility, adaptability, relative advantage, and reliability. The data were analyzed using descriptive and inferential statistics. Correlation and regression models were used to evaluate the relationships between the variables. The results indicated strong positive correlations between security, compatibility, relative advantage, reliability, and customer retention. However, ease of use had a lower correlation, and adaptability had a negative correlation with customer retention. The regression analysis revealed that security, relative advantage, compatibility, and reliability were statistically significant predictors of customer retention. The study concluded that there is a statistically significant and positive relationship between banking innovation dimensions and customer retention. Therefore, the study recommends that the Commercial Bank of Ethiopia invest in enhancing digital banking that can deliver outstanding experiences to customers
