eThesis - School of Business electronic theses

The ultimate goal of financial integration is promoting the economic growth of Europe. There has been clear evidence that integration of financial markets in Europe has increased international competition. The competition has become more intense and as a consequence, markets have become more efficient. Increased product innovations, adaption of distribution channels to deliver products for larger amount of customers are the strategic parts that banks must be able to respond.

The research objective is to conduct an analysis of the financial integration in banking field. This makes it possible to understand the context, where the banking institutions operate currently in Finland. In relation to this, another main objective is to examine the strategies of the two different case companies in Finnish market. Furthermore, the study attempts to analyze how the case companies have responded to the integration in general and international competition in Finnish market. Literature concerning implications of integration in general and response strategies to competition are presented. In addition this research also studies what response strategies companies have adopted to compete in integrated market.

As a result of this study it can be stated that chosen response strategies of the case companies have included consolidation strategies in terms of mergers and acquisitions. As regards distribution channels, internet banking is important distribution channel for both the case companies. The case companies’ operation strategies included product differentiation.