iOS autodetects and automatically switches languages as you described. The globe icon is just for switching key layouts. Language is independent of key layout.
Looks pretty half-assed implementation to me. If they have autocorrect for Finnish, it shouldn't be too difficult to do quick lookups for both Finnish and English. And everyone knows that it's Autocorrect's carefully designed brand image to screw up, switching languages would allow more creative mistakes.
This is also consistent with my experience.
[1] https://support.apple.com/en-us/HT207525