The Archbishop of Canterbury has spoken of the need to create community in churches if they are to attract more people through their doors.

The Most Reverend Justin Welby told Total Politics magazine that many people were still turning to the church to mark significant life events, like the birth of children and bereavements.

His hugely successful prayer journey through five cities in the days leading up to his enthronement, he continued, had shown him that "when we are actually very hospitable, when we do manage to give the impression of being signed up members of the human race, when we're not bossing people around too much there's a very strong response".

"When people find a community where they are loved and cared for they find that very attractive," he said.

The Archbishop made the comments in a wideranging interview in which he also shared the Church's plans to drive payday lenders like Wonga out of business by intensifying competition from credit unions. 

He told the magazine he had had a "good conversation" with Wonga boss Errol Damelin. 

"I said to him quite bluntly that 'we're not in the business of trying to legislate you out of existence; we're trying to compete you out of existence," the Archbishop revealed.

Payday lenders have come under fire for their high rates of interest and have been accused of exacerbating personal debt problems. Credit unions are regarded as more ethical lenders because they charge low rates of interest.

The Archbishop, who sat on the Parliamentary Commission on Banking Standards, has made previous calls for a cap on the interest rates charged by loan companies.

He said the Church was "putting our money where our mouth is" by starting a credit union for staff and working with the main trade bodies for credit unions.

"We've got to have credit unions that are both engaged in their communities and much more professional, and the third thing is people have got to know about them. It's a decade long process," he said.

Commenting on welfare reforms, Archbishop Welby was critical of the "scrounger" rhetoric used by some politicians and parts of the press, saying it was "very damaging".

"Of course some people are scroungers, some multimillionaires are scroungers, you find people who behave wrongly, badly, wickedly across the whole range of the social spectrum," he said.

"It's nothing to do with being on welfare – I mean goodness knows we've looked at the banking system over the last year. And again, at the heart of Christian understanding of human beings is that they are flawed but are made in the image of God: we shouldn't stereotype people in a particular category as scroungers; that's not the right way to talk about people."