Increasing demand for sophisticated financial instruments, in a world where financial markets have turned volatile, would soon compel Philippine banks to boost risk management systems, apart from merely complying with tighter regulations on accounting.

"We've seen the development of new products, so the development of risk management systems is high on the agenda," said Graeme Beardsell, managing director for Asia-Pacific at global software and solutions Misys International Financial Systems.

In a briefing on Friday, Beardsell said the shift to stiffer international accounting rules requiring banks to measure and recognize derivatives trades (International Accounting Standards or IAS39), for instance, would be an opportunity for Philippine banks to more efficiently identify and manage risk operations.

Derivatives refer to complex financial instruments whose values are based on the values of an underlying good or index.

"The Philippines is well-adapted, when it comes to systems and processes, to have a much more stable services financial sector," he said.

Tat Sang Fung, associate director for financial engineering at Misys based in New York, said the demand for banks to be able to capture and manage hedging products would increase in the years ahead.

"This is a global trend," Fung said. "All around the world, the need to risk-manage structured products is going to be there. Banks will be there to provide service to the market and they always have.

"There's a business, there's opportunity," he added, citing for instance the need for importers and exporters to hedge against foreign exchange swings.

For businesses, he said hedging accounts would help smoothen earnings volatility.

And for banks seeking to provide such services, he said it would be imperative to "find the right solutions."

He said the shift to IAS39 was not only "accounting-intensive" but also "IT-intensive."

"Compliance with IAS39 could be a catalyst to looking at the next generation of solutions that gives you greater business value," Beardsell said.

Misys, which has an array of banking solutions, aside from banking, treasury and capital markets, services 80 percent of the country's commercial banks.

Its specialist treasury and capital markets team offers data warehousing and financial services solutions expertise that banks need to comply with IAS39.

The company sees that the adoption of IAS39 will attract inflows of foreign investments by increasing the use of more hedging instruments.

The Bangko Sentral ng Pilipinas (the Philippine central bank) has required local banks to adopt IAS39, but deferred the deadline for compliance after banks sought more time to adjust their systems.