Banks was originally involved in the theater; he had dropped out of Indiana University to stage manage a road company of "Hair." When the company toured Australia, he stayed Down Under, directing and managing companies of "Grease" and "Jesus Christ Superstar". He returned to the US and in 1974 went to Los Angeles, where he co-starred with Jean Simmons in the company of "A Little Night Music." While appearing on stage, he made his TV debut in an episode of "Barnaby Jones". More TV work followed, including a pilot called "The Macahans", about a pioneer family, but mostly Banks found himself playing small parts, such as a sergeant in "Ike" the 1979 ABC miniseries. In 1981, he got his first break when chosen to play Dutch Schultz in "The Gangster Chronicles" an NBC series which ran only seven episodes but was well received by the critics. The following year he was Vinnie on "Report to Murphy" (CBS), about life in a parole office, and in 1985, he was Kommander Kroll, the evil slug out to kill a family transferred to the future in "Otherworld" (CBS). But it was as Frank McPike that Banks reached TV player status. He remained with "Wiseguy" for four years and earned an Emmy nomination as Best Supporting Actor for his efforts. Banks also appeared in TV-movies, principally "Who is Julia?" (CBS, 1986), in which he played a confused man married to a woman who looks like his wife but has been given the transplanted brain of a model. In 1996, he reprised his role of McPike in the ABC TV-movie "Wiseguy" before demonstrating his comedic abilities as the bar owner with a crush on Sharon Lawrence in the NBC sitcom "Fired Up" (1997-98).

As was the case with television, Banks' feature film work consisted of bit and small parts for some time. He made his debut as a marine at a party in "Coming Home" (1977) and was a marine again in "Who'll Stop the Rain" (1978). In "Frances" (1982), he was the hitchhiker Jessica Lange encounters. It was not until "Beverly Hills Cop" (1984) that Banks won notice. As Zack, he knocks Eddie Murphy unconscious in the Detroit sequence and then yearns to finish him off in Beverly Hills. His subsequent roles were hardly noteworthy until 1995's "Under Siege 2: Dark Territory", in which he played a pivotal role. Banks subsequently played a villainous role in the 1996 remake of "Flipper" and he also wrote the screenplay for the direct-to-video urban crime film "Saturday Night Special" (1994).