Dunford spent ten years at Everton from 1994 where he rose to the position he now holds at St Andrew's.
"You always want to live the dream. This is the second largest city in the country and always will be, in our life times anyway," said Dunford, who was also chief executive at Championship outfit Plymouth before being made redundant during the summer.
"Liverpool is a passionate place for football. Manchester is a passionate place for football, so is Glasgow. London I think lacks a little bit of that passion.
"In Birmingham you can sense that passion. You can walk down the streets and meet Villa fans and Blues fans and they are passionate people about their football. What we've got to do, it's easy me sitting here saying it, but we've just got to light that piece of touch paper and try and take them with us.
"Can we make promises? It'd be an absolute folly to make false promises. All we can do is our best and hope they believe in us.
"Yes, Birmingham has got potential to be up there with Manchester and Liverpool. Look at the population. When you look at it over the years since the war, both clubs have been in a yo-yo. Sometimes the Blues have been in front of Villa. At the moment Villa are slightly ahead of us - they may think that they are a long way ahead. So let's give them a run for their money.
"It's about, first and foremost, improving Birmingham City Football Club, year-on-year, on and off the field."