In a large mixing bowl, whisk together the sweetened condensed milk and cold water until fully incorporated.

Add the instant vanilla pudding mix to the milk mixture and whisk vigorously for 2 minutes until smooth and slightly thickened.

Cover the pudding mixture and refrigerate for at least 30 minutes to allow the gelatin to fully set.

In a chilled bowl, beat the heavy whipping cream and vanilla extract on high speed until stiff peaks form.

Gently fold the whipped cream into the set pudding mixture using a rubber spatula until no white streaks remain.

In a 3-quart glass dish, create a base layer using one-third of the vanilla wafers.

Top the wafers with half of the sliced bananas and spread half of the pudding mixture evenly over the top.

Repeat the layers with another third of the wafers, the remaining bananas, and the remaining pudding mixture.

Garnish the top with the final third of vanilla wafers, either whole or crushed.

Cover and refrigerate for a minimum of 4 hours to allow the wafers to soften and flavors to meld.