Prepare the Pudding:
In a large mixing bowl, whisk together the sweetened condensed milk and cold water until well combined.
Add the instant vanilla pudding mix and whisk for about 2 minutes until the mixture is smooth and begins to thicken.
Cover the bowl and refrigerate for at least 4 hours or overnight to set.
Make the Whipped Cream:
In another mixing bowl, beat the heavy cream and vanilla extract with an electric mixer on medium-high speed until stiff peaks form. This usually takes about 3-4 minutes.
Combine the Pudding and Whipped Cream:
Once the pudding has set, gently fold in the whipped cream until well combined and smooth.
Layer the Banana Pudding:
In a 9x13 inch baking dish, spread a thin layer of the pudding mixture on the bottom.
Add a layer of vanilla wafers, followed by a layer of sliced bananas.
Spread a third of the remaining pudding mixture over the bananas.
Repeat the layers two more times, ending with a layer of the pudding mixture on top.
Chill and Serve:
Cover the dish with plastic wrap and refrigerate for at least 4 hours or overnight to allow the flavors to meld together.
Before serving, garnish with additional whipped cream and crushed vanilla wafers if desired.