Banana on shield is unsafe, you now use Bananas purely as a punishment on laggy moves. His recovery is indeed bad, and his range and kill power have been nerfed from Smash 4.
However, his combos still live. D Throw can lead to B Air chains, and F Air follow ups. And at higher %s, you can still follow up with U Air. Pummeling is also now a good thing to do, as it's faster and you need the extra %s. Banana > Dash > F Smash is our best killing option, but D Smash as of the latest patch is also a very strong KO move. Dash attack is now majorly buffed however! And it allows for easy F Air follow ups, you'll appriciate that at least. N Air is also much better, and landing it will also results in almost a guranteed follow up with B Air or F Air.
Diddy is no longer a Top Tier in Ultimate, but he's still fun and quite underrated. It will take more skill to use him well, and he now has glarring weaknesses with his exploitable recovery.. but he's also way less effective against rush down characters like Fox. Or more like, Fox is just really good now, and Diddy quite isn't. You'll need to learn to play the mid range game better, and at the very least, Banana has more range when thrown. Also, grabs are harder to land in general in Ultimate, so you'll need to adjust to that as well.