In a large mixing bowl, whisk together the instant pudding mix and cold milk for 2 minutes until thickened.
Stir in the sweetened condensed milk and vanilla extract, then gently fold in the whipped topping until well combined and fluffy.
In a 9x13-inch dish, layer one-third of the vanilla wafers on the bottom, followed by one-third of the sliced bananas, then one-third of the pudding mixture.
Repeat the layering process two more times, ending with the pudding mixture on top.
Cover tightly with plastic wrap and refrigerate for at least 4 hours or overnight before serving.
Garnish with additional crushed vanilla wafers on top just before serving if desired.